Broker tips: Antofagasta, Wood Group
By Iain Gilbert
Date: Thursday 03 Apr 2025
(Sharecast News) - Berenberg has kicked off coverage of Antofagasta with a 'buy' rating, highlighting the "pure-play" benefits of the copper miner which offers "compelling" growth potential.
The German bank initiated coverage on the stock with a 2,100.0p target for Antofagasta's shares, representing a 25% upside to current levels.
Pure-play copper businesses trade at a premium valuation multiple to their diversified peers, Berenberg said, due to the attractiveness of the copper investment case. What's more, Antofagasta offers "sector-leading EBITDA margins", it said.
"Antofagasta is a FTSE-100-listed pure-play copper miner, which is a rarity, as other miners with copper exposure tend to be diluted by other metals with less compelling market dynamics, and it thus commands a premium multiple," Berenberg said.
The broker hailed the miner's Chilean asset base potential, with volumes expected to grow from around 680,000 tonnes in 2025 to 900kt by 2028, helped by the second concentrator project at Centinela and improved grades at its Los Pelambres mine.
Berenberg also said that the market was underestimating Antofagasta's 18.94% stake in Peruvian miner Buenaventura, which provides a lot of upside despite the latter's shares having surged by 56% since the former first invested in 2023.
Analysts at Canaccord Genuity placed their target price and rating on oilfield services business Wood Group under review on Thursday, stating it was "lacking reasonable grounds" to take a stance on the stock.
Wood Group said earlier in the week that it does not expect to be able to publish results by 30 April and was now expecting to have its shares suspended from trading on the same date. It also stated that there was an expectation of material restatement of accounts for each of the past three years.
As a result, Berenberg no longer believe it has "a reasonable basis" for a price target on Wood.
"We continue to believe that the franchise has a substantial value, as indicated by the continuing discussions with Sidara, but we do not believe this is an adequate basis for a valuation," said the German bank.
Berenberg previously had a 'buy' rating and 250.0p target price on the stock.
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