On Friday, Citi analysts adjusted their stance on Anglo American (JO:AGLJ) PLC (AAL:LN) (OTC: NGLOY), downgrading the stock from Buy to Neutral and revising the price target to GBP 28.00 from the previous GBP 30.00. The change in rating comes after a period of significant share price outperformance for Anglo American, which saw approximately a 30% increase since the company announced its restructuring plans in May 2024.
The analysts noted that the current share price of Anglo American has incorporated a fair likelihood of the company's portfolio optimization measures being successful, alongside a re-rating of the remaining business. The sum of the parts valuation, now standing at GBP 27 per share, suggests there is limited room for the stock to grow, with the valuation at 6.5 times the estimated 2025 EBITDA being higher than the average of its global diversified mining peers.
The downward revision in the price target to GBP 28 reflects the analysts' view that the potential for further stock price appreciation is limited at current levels. They have accounted for the company's operational recovery and efforts towards restructuring, which have been significant factors in the stock's previous gains.
Citi analysts also highlighted the key risks that could lead to an upside for Anglo American's stock. These include a potential rally in commodity prices or renewed merger and acquisition interest from global miners, which could positively impact the stock's performance.
Investors in Anglo American PLC are now considering Citi's revised outlook, which suggests a more cautious approach to the stock following its substantial gains post-restructuring announcement. The new price target and neutral rating reflect the analysts' assessment of the stock's future potential based on current market conditions and company fundamentals.
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