In mid morning trading, the FTSE 100 listed group’s shares were up 1.4%, or 24.4p at 1,724.8p, with Morgan Stanley also raising its target price for the stock to 1,900p from 1,600p.
In a note to clients the US bank’s analysts said: “AAL offers re-rating potential as it continues to execute a back to basics strategy (cost out, debt down) now enhanced by a return to modest growth and potential for strategic portfolio changes and/or additional cash returns under new governance, and a more stable investment backdrop.”
They noted that Anglo American shares are up over 50% since July, but “the discount to peers has expanded. Its spot FCF yield of 15% 2018e and 19% 2019e compares to 10% / 13% for London-listed diversified peers.”
The analysts said: “We expect this gap to narrow as the investment case normalises, with possible further catalysts from scope to extract strategic value from its portfolio under a new chairman and a more stable investment environment in South Africa.”