Credit Suisse ups price target on Anglo American shares
By Sean Farrell
Date: Wednesday 24 Jun 2020
(Sharecast News) - Anglo American shares will rise further because investors have not spotted the extent of the miner's potential to recover from the Covid-19 crisis, Credit Suisse said as it increased its price target on Anglo American shares.
Credit Suisse analyst Conor Rowley and colleagues said they were conservative on potential price rises but that Anglo American had other qualities that were underrated by the market. The analysts upped their target on the shares to £20.20 from £18 and kept their 'outperform' rating.
Anglo American's volumes will increase at its Kumba iron ore business and platinum mines followed by a recovery in the diamond market. The company will then ramp up its Quellaveco copper project.
The company has also said technology improvements could cut costs by $1bn and that these gains are not included in earnings estimates. Anglo American's high product diversification also sets it up well for uncertain markets, Rowley said.
"Anglo has performed strongly over the past few months but ... we think this is a simple reflection of what we have seen in the underlying commodities and that the shares are yet to reflect the longer-term drivers in the company's recovery from the pandemic," Rowley wrote.
The path mapped out gives a steady stream of catalysts for the shares, Rowley said. Anglo American also plans to quit its South African thermal coal operations in the next two or three years. For environmental reasons, and following Norges' decision to sell its Anglo share because of the exposure, this is good news, Rowley added.
Anglo American shares were down 2.3% to £18.43 at 16:02 BST. The shares have gained more than two-thirds since dropping to £10.92 on 23 March.
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