Antofagasta PLC (LSE:ANTO) has been downgraded by UBS, removing its 'buy' rating after a 135% rally over the past year as limited near-term upside is seen despite confidence in the miner’s long-term copper growth.
The Swiss investment bank moved to a 'neutral' stance and raised its 12-month price target from 3,500p to 4,200p but noted that with shares now at 4,134p, the stock has re-rated “meaningfully” and is up about 90% more than the copper price over the same period.
Analyst Daniel Major said the rally had been driven by investor demand for lower-risk copper plays and the de-risking of Antofagasta’s Centinela growth project in Chile, which remains on track to start up in 2027.
Copper production is expected to rise 3% this year to 671,000 tonnes, before stepping up to around 850,000 tonnes from 2027–28.
"We remain positive on copper and expect tightening fundamentals to support higher prices medium-term; however in our view recent copper price gains (+>25% since end of Nov-25) have been driven more by investor positioning, partially due to the flight to 'hard assets' in the debasement trade, rather than physical tightness," said Major.
"Recent inventory build suggests demand is being impacted by recent price gains. In our view this leaves copper vulnerable to short-term consolidation, but we expect improving fundamentals to support prices at elevated levels (>$10k/t) medium-term."
Free cash flow and dividends for ANTO are expected to improve from 2027 as capex falls.
UBS now assumes a 10x earnings multiple in its valuation, up from 8.5x, but sees better opportunities elsewhere in the sector, including Anglo American PLC (LSE:AAL) and Teck Resources Ltd (USA) (TSX:TCK).