Broker tips: Associated British Foods, Antofagasta
By Iain Gilbert
Date: Friday 15 Aug 2025
(Sharecast News) - Shore Capital has reiterated a 'buy' rating for retail and food conglomerate Associated British Foods, praising the company's recent actions to deal with underperforming parts of the business.
Ahead of a trading update expected from the firm in September, the broker noted ABF's "demonstrable action to deal with persistent problem children" - namely its bioethanol business Vivergo, the Spanish sugar division Azucarera and UK bakery operations Allied.
The company has already announced that has kickstarted a restructuring of Azucarera, which involves simplifying its manufacturing operations, cutting costs and improving efficiency. Meanwhile, it is currently negotiating with the UK government about Vivergo to find a regulatory solution that it hopes will mitigate certain rules on imported ethanol and the impact of US trade tariffs.
Meanwhile, ABF announced on Friday that it was acquiring the Hovis Brand in an effort to bolster the Allied division, bringing together "two of the leading names in the UK sliced bread market", according to Shore Capital.
"Quite how much profitability will emerge and when, remains to be seen, but we can foresee a welcome boost to ABF's Grocery division here, given that Allied has been making trading losses amounting to, we suspect, £20-30m per annum for some time," the broker said, as it "applauded these workstreams", noting that "aligning the stars of ABF is virtuous to the group's investment thesis, to us, and so bringing Allied, Azucarera and Vivergo in from the cold is welcome news".
"In the big scheme of things, [...] we welcome the important improvement in prospects for its UK bakery division, and we reiterate our Buy stance on ABF equity where valuation multiples remain undemanding, to us."
Analysts at Berenberg raised their target price on Chilean multinational Antofagasta from 2,100p to 2,200p on Friday following the group's first-half results a day earlier.
Berenberg said Antofagasta's interim results were broadly in line with its expectations, but noted it also included a beat on net debt. Revenues of $3.8bn and underlying earnings of $2.2bn were both in line with estimates, while underlying earnings per share came in at $0.47, versus its $0.48 estimate.
The German bank highlighted that the beat on net debt, which at $2.3bn was well below its $2.9bn estimate, was driven by capex phasing for ongoing growth projects at Centinela and Los Pelambres, although capex was expected to rise in H2.
"Overall, this was an unsurprising set of results, with the stock closing down by c0.7% on a down day for copper prices," said Berenberg, which reiterated its 'buy' rating on the stock.
"We update our model for the H1 financial results and make slight adjustments to our estimates (ie capex phasing). This has a small impact on our estimates and our price target lifts to 2,200p per share. For investors looking for high-quality copper exposure, we think that Antofagasta is a clear stand-out. The shares are currently trading on 2.09x NAV and 7.4x 2025E EBITDA."
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