Shares in Anglo American (LON:AAL) have advanced as analysts at Jefferies hiked their rating on the stock. The analysts have pointed to strong fundamentals for the mining sector, and see a share buyback as likely at the FTSE 100 group this year.
As of 12:18 GMT, Anglo American’s share price had added 0.79 percent to 1,617.60p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.31 percent higher at 7,719.89 points. The group’s shares have added more than 41 percent to their value over the past year, as compared with about a seven-percent rise in the Footsie.
Jefferies upbeat on Anglo American
Jefferies turned bullish on Anglo American today, hiking their rating on the stock from ‘hold’ to ‘buy,’ and lifting their price target from 1,500p to 2,000p.
“Based on our analysis, mining sector fundamentals are very strong due to serious supply constraints at existing mines, a lack of supply growth from new projects, stable Chinese demand, and improving demand in the rest of the world,” the analysts pointed out in a note to clients, as quoted by Proactive Investors, adding that the blue-chip miner’s balance sheet was ‘no longer a concern’.
The newswire also quoted Jefferies as commenting that the group was a candidate for restructuring, having a new chairman, and with activist investor Anil Agarwal holding 20 percent of the shares.
“Even if there are no major corporate changes at Anglo, a sizeable share repurchase is likely this year,” the broker said.
Other analysts on blue-chip miner
As of January 3, the consensus forecast amongst 24 polled investment analysts covering Anglo American for the Financial Times advises investors to hold their position in the company. According to MarketBeat, the blue-chip miner currently has a consensus ‘hold’ rating and an average price target of 1,445.67p.