Morgan Stanley has revised its stance on Antofagasta Plc (LON:ANTO: LN) (OTC: ANFGF), shifting the stock's rating from Equalweight to Underweight.
The firm also adjusted the price target to £16.00 from the previous £19.20. This decision comes amid a recent downturn in copper prices and a comparative analysis of the stock's performance against industry benchmarks.
Antofagasta's shares have experienced a significant drop, declining 26% from their second-quarter peak.
Despite this fall, the stock has shown resilience year to date, outperforming the EuroStoxx Basic Resources index by 19% on a total shareholder return basis. However, Morgan Stanley highlighted concerns about Antofagasta's operational performance in the first half of 2024.
The firm pointed out that the current stock price assumes a perpetual copper price of $4.78 per pound. This is notably higher than the current spot price and exceeds Morgan Stanley's commodities team's long-term incentive price forecast of $4.31 per pound in real 2024 terms.
Additionally, Antofagasta's shares are trading at a 2025 spot enterprise value to EBITDA (EV/EBITDA) multiple of 8.3x on a consolidated basis, which is a 24% premium over its historical average of 6.7x.
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