UBS has raised its price target for Anglo American PLC (LSE:AAL) to 2,800p from 2,700p, citing the company's imminent restructuring plans.
Analysts highlighted key developments expected in the next three months, including the sale of Anglo’s metallurgical coal assets and the planned spin-out of its Anglo American Platinum (Amplats) division.
Final bids for the met-coal assets were submitted on November 13, with offers from Yancoal and consortia led by Stanmore and Peabody.
“In our opinion, Anglo has very attractive copper assets and once the complexity of the group is reduced by restructuring, the stock will either re-rate materially (ie too expensive for M&A) or it is likely to be purchased,” said UBS analysts.
Regarding the collapsed talks of a combination with BHP Group Ltd (LSE:BHP, ASX:BHP), UBS said: “In our opinion, BHP has strategic challenges with its copper assets with significant capex needed to sustain production; a combination with Anglo would moderate this and be transformation to BHP's structure.”
Currently trading at 5.7 times enterprise value to EBITDA, Anglo America is cheap compared to the copper peer average of 7.7 times EV/EBITDA, UBS noted.
Analysts estimated that copper will comprise 66% of Anglo American’s EBITDA once its restructuring is completed.