On Friday, Anglo American (JO:AGLJ) PLC (AAL:LN) (OTC: NGLOY) received an upgrade from Hold to Buy by a Jefferies analyst, who also increased the company's price target to GBP28.50, up from the previous GBP25.00. This revision comes after Anglo American's shares experienced a decline of approximately 15% following its restructuring announcement earlier in May.
The upgrade reflects a positive shift in the analyst's perspective, acknowledging considerable progress in the company's restructuring efforts and improved operational performance. Despite the risks that are still present due to the ongoing restructuring, the analyst sees value in the current share price of Anglo American.
The new price target of 2850p aligns with the updated Sum-of-the-Parts (SoTP) analysis, which is deemed most suitable for evaluating a company during a breakup phase. The target considers the progress made in restructuring, operational enhancements, growth in free cash flow (FCF), and the potential for near-term mergers and acquisitions (M&A).
Anglo American is currently trading with a 2025 estimated Price-to-Earnings (P/E) ratio of 12.7 times, an attributable Enterprise Value to EBITDA (EV/EBITDA) of 6.3 times, and a free cash flow yield of 4.5%. These metrics contribute to the analyst's positive outlook and the decision to upgrade the stock.
This upgrade suggests a promising future for Anglo American as it continues to navigate through its restructuring plan and capitalize on operational improvements. The increased price target and upgrade to a Buy rating reflect the analyst's confidence in the company's trajectory and its financial prospects.
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