Anglo American tops FTSE 100 on Credit Suisse upgrade
Anglo American rose to the top of the FTSE 100 after Credit Suisse upgraded the stock to ‘outperform’ from ‘neutral’.
Anglo American
2,634.50p
17:09 01/05/24
FTSE 100
8,121.24
16:49 01/05/24
FTSE 350
4,464.43
17:14 01/05/24
FTSE All-Share
4,418.60
16:54 01/05/24
Mining
10,281.14
17:14 01/05/24
It noted that a wide valuation gap has opened versus peers with the selloff in the stock led by balance sheet concerns rather than earnings.
“We think at current levels investor focus should switch to the underlying asset value,” said the bank, adding that Anglo is trading below its 2008/2009 crisis lows and at a large discount to peers.
At these levels, M&A risk can’t be ignored and CS sees up to 30% upside potential if the company can deliver on its restructuring goals and up to 50% if this is joined by an apparent demand recovery in China in the second half of 2015.
Credit Suisse said it expects a decision on the dividend to be made in early 2016, but, in the intervening period, steps to improve cash flows through asset sales and cost reductions could materially change risk perceptions.
The bank said the market appears to be placing zero value on the entire iron ore and platinum divisions, which is overly bearish.
“Under new management we continue to believe that genuine change is underway at Anglo,” said CS.
It said the commodities downturn has made executing on parts of the restructuring plan more challenging, but once Anglo gets where it wants to be by the end of 2016, the company will have 5-6 main commodity divisions - comparable with peers - capex will be 25% lower than 2015 levels and the majority of targeted cost reductions and asset improvements should be delivered.
CS has a 1,350p price target on the stock.
At 08:28, shares were up 1.9% at 886.40p.