UBS has shifted its view on Antofagasta, moving the stock from Buy to Neutral while simultaneously raising its price target to GBP42.00 from GBP35.00. The bank framed the change as a reaction to the company’s marked outperformance over the past year, which has pushed valuation multiples well above historical averages.
Market data from InvestingPro shows Antofagasta trading at $49.43 and indicates the share price looks expensive relative to its Fair Value. That assessment is consistent with UBS’s more cautious stance despite the higher target price.
The Chilean copper producer has delivered very strong returns for shareholders in the last 12 months. UBS noted roughly a 135% total shareholder return measured in U.S. dollars over that period, a performance that substantially exceeded the copper price by about 90% and outpaced the COPX index by roughly 40%.
InvestingPro supplies a comparable figure, recording a 120.71% total return over the past year. Those gains have been accompanied by multiple expansion: UBS observed that Antofagasta’s EV/EBITDA moved from a long-run average of 8.5x to around 14x on consensus estimates and about 10x at spot prices.
InvestingPro’s metrics support this view, showing a current EV/EBITDA of 13.85 and a P/E ratio of 44.53, and ProTips has flagged the company as "trading at a high earnings multiple." UBS attributes much of the rerating to two specific drivers.
First, the de-risking of the Centinela Growth Project, which UBS says remains on track for a 2027 startup and is expected to underpin approximately 30% volume growth. Second, operational and other challenges at several large-cap copper producers have redirected investor interest into companies perceived as lower risk or with simpler copper exposure.
UBS pointed to difficulties at peers such as Freeport-McMoRan, Anglo American, Teck Resources, Ivanhoe Mines, and First Quantum as contributing to investor migration toward names like Antofagasta and Southern Copper.
In a separate set of broker moves, Deutsche Bank revised its stance on mining stocks amid strong metal prices. Deutsche Bank downgraded Antofagasta PLC from Hold to Sell, while raising its target price to 2800p from 2400p. At the same time the bank kept Buy ratings on Anglo American, Boliden AB, Freeport-McMoRan, Glencore, Norsk Hydro, and Teck, and increased target prices on several of those names.
European copper-related stocks have broadly risen as global copper prices hit record highs. Deutsche Bank and UBS both linked the rally in part to a weaker dollar and persistent geopolitical tensions, factors the banks said have created a supportive backdrop for producers.
These developments collectively underscore a robust environment for the metals and mining sector, but also highlight valuation and concentration considerations for investors focused on large-cap copper exposure.
Key takeaways
- UBS downgraded Antofagasta from Buy to Neutral while raising its price target to GBP42.00 from GBP35.00, citing valuation concerns after significant outperformance.
- Antofagasta has delivered very large shareholder returns over the last 12 months, supported by multiple expansion and expectations of volume growth from the Centinela Growth Project.
- Deutsche Bank also adjusted its view, downgrading Antofagasta PLC to Sell while raising its target price, and kept Buy ratings on several peers as metal prices strengthened.
Risks and uncertainties
- Elevated valuation multiples - InvestingPro and UBS data indicate Antofagasta is trading at high earnings and EV/EBITDA multiples compared with historical averages, posing valuation risk to investors in the mining sector.
- Project execution - The Centinela Growth Project is identified as a growth driver but remains on a path to startup in 2027, which leaves timing and execution as potential sources of uncertainty for future supply and volumes.
- Market concentration and competitor issues - Operational challenges at other large-cap copper producers have concentrated investor interest in assets with perceived simpler exposure, which could reverse if competitor situations change or copper prices shift.