On Wednesday, CFRA maintained its Hold rating on Antofagasta (LON:ANTO:LN) (OTC: ANFGF) but increased the stock's price target from GBP18.00 to GBP22.00. The new target is based on an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 8 times, up from the historical average of 6 times.
The adjustment reflects expectations that ongoing global copper supply disruptions are likely to continue bolstering copper prices in the near term.
Antofagasta's first-quarter copper production in 2024 experienced an 11% year-over-year decline. This was primarily due to lower ore grades at the Centinela mine and extended maintenance on the Los Pelambres concentrate pipeline. Still, operations have since resumed, and Antofagasta plans to reschedule approximately 27 kilotons of copper in concentrate into future quarters for production and sales.
Despite the production setback, Antofagasta has maintained its full-year production guidance, anticipating an increase of 1% to 7% year-over-year, aiming for 670-710 kilotons. The company expects production to rise over the remaining months of the year.
In light of the robust copper prices, CFRA has revised its earnings per share (EPS) estimates for Antofagasta. The firm now projects an EPS of $0.81 for 2024, up from the previous estimate of $0.76. For 2025, the EPS forecast has been adjusted to $1.01 from $0.97. These revisions come as the firm evaluates the impact of the current copper market on Antofagasta's financial performance.
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