Anglo American boosted by RBC Capital upgrade

Anglo American got a boost on Monday as RBC Capital Markets upgraded the stock to ‘outperform’ from ‘sector perform’ and lifted the price target to 1,000p from 800p saying the tide is turning for the investment case

“With the balance sheet striding towards rehabilitation and volume improvements in H2, Anglo's rating likely to improve. Further, divestments provide catalysts for the shares,” RBC said.

The Canadian bank said Anglo’s first-half results were above both consensus and its forecasts despite disappointing copper production, with a strong effort to control or reduce costs across the group.

In particular, it highlighted $1.1bn of free cash flow as a positive and said the company’s balance sheet was beginning to look respectable.

Looking forward, it said that in the second half there should be a greater benefit on costs from volumes, productivity and cost cutting, including headcount.

While there will be lower activity in diamonds for seasonality reasons, volumes in copper, coal and iron ore should improve.

“Risks remain commodity prices, South Africa and the impact of any GBP strength on the share price,” RBC said.

At 0930 BST, Anglo shares were up 3.8% to 862.30p.