Shares in Anglo American (LON:AAL) have been subdued in today’s session, with investors digesting the outcome of the German election, and as analysts at Deutsche Bank turned bearish on the blue-chip miner. The broker has pointed to the recent stock outperformance.
As of 13:33 BST, Anglo American’s share price had given up 0.96 percent to 1,310.50p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.25 percent lower at 7,292.52 points. The miner’s shares have added just under 38 percent to their value over the past year, and are up by some 13 percent in the year-to-date.
Deutsche Bank lowered their stance on Anglo American from ‘hold’ to ‘sell’ today, pointing to the recent share price’s outperformance relative to the sector. The analysts, however, lifted their price target on the shares from 1,080p to 1,250p on the back of near-term earnings upgrades.
“Although cheap on near term multiples, high bulk exposure makes the company vulnerable to lower demand and prices in Q417 and 2018,” Deutsche Bank further explained, as quoted by Sharecast, adding that they expect the current year “to be a peak for cash flows given declining prices and rising capex requirements over the medium term”.
The downbeat comments come after Volcan Investments, the family trust of Indian billionaire Anil Agarwal, unveiled plans last week to buy up to £1.5 billion in shares in the FTSE 100 company, building on its surprise £2-billion investment earlier this year.
Analysts at Macquarie reiterated their ‘hold’ rating on Anglo American earlier this month, valuing the shares at 1,250p. According to MarketBeat, the blue-chip miner currently has a consensus ‘hold’ rating and an average price target of 1,333.67p. Anglo American is scheduled to post its third-quarter production report on October 24.