The FTSE 100-listed miner Anglo American PLC (GB:AAL) could emerge as a potential takeover target following its disappointing production numbers and a declining share price, speculates Jefferies analyst Chris LaFemina. LaFemina’s opinion follows a 9% decline in Anglo American shares on Friday after the company warned of its weaker-than-expected production outlook and reduced capital spending.
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Headquartered in London, Anglo American is a leading producer of platinum. The company’s diverse product portfolio also includes diamonds, copper, and iron ore.
Analysts’ Opinions
Year-to-date, Anglo American stock has lost around 42% of its value. The company’s performance has been impacted by volatile commodity prices, higher costs, and operational hurdles, prompting it to streamline its operations. Last week, the company announced that its total production is expected to decrease by about 4% in 2024, followed by an additional 3% reduction in 2025. AAL also slashed its capital spending by $1.8 billion through 2026.
Analysts from Jefferies, Barclays, and Deutsche Bank have reduced their price targets on the stock, expressing their concerns.
Jefferies analyst reduced his price target to 2,500p from 2,600p while maintaining a Buy rating on the stock. LaFemina thinks that Anglo American may participate in the “broader trend of industry consolidation.” He hinted that its mining competitor Glencore PLC (GB:GLEN) could be a potential acquirer.
Yesterday, analyst Liam Fitzpatrick from Deutsche Bank also lowered his price forecast on the stock from 3,000p to 2,900p, while keeping his Buy rating intact. Similarly, Barclays analyst Ian Rossouw cut his price target by 10% to 2,575p following the “disappointing” production update from the company. However, Rossouw called the recent plunge in the share price an “overreaction” and believes the company is just “bruised, but not beaten.”
Meanwhile, analyst Tyler Broda from RBC Capital thinks that even though the production cuts are not entirely positive, the newly streamlined company is better equipped to address the more challenging aspects of the business.
Is Anglo American a Good Share to Buy?
On TipRanks, AAL stock has received a Strong Buy consensus rating based on the recommendations from 12 analysts. It includes nine Buy and three Hold ratings. The Anglo American share price target is 2,790.8p, which is 56% above the current price level.
