Goldman upgrades Antofagasta, KAZ Minerals following underperformance

Goldman Sachs upgraded Antofagasta to ‘neutral’ from ‘sell’ with an unchanged price target of 440p, saying the risk/reward is now balanced.

GS noted that since being added to the ‘sell’ list in February, the stock is down 35% versus the FTSE World Europe down 8.3%.

The bank attributed the underperformance to operational issues at Anto’s mines in Chile, a slump in copper prices, and a rich price paid for the 50% stake in the Zaldivar mine.

It said that at the current depressed price and with spot copper prices now within around 5% of its trough forecasts, the risk/reward for the stock is balanced.

Goldman also upped its rating on copper producer KAZ Minerals to ‘neutral’ from ‘sell’, keeping the price target at 110p, following underperformance.

Since being added to the ‘sell’ list in October, the stock is down 48% versus the. FTSE World Europe down 3%.

The bank said the valuation now fairly reflects the concerns it had predicated its ‘sell’ rating on.

These included the perfect execution on delivery of growth and restructuring of the debt repayment schedule. GS said it is yet to see delivery but thinks they are now reflected in the price.

In addition, it said KAZ’s announcement that it will reschedule $300m of contractual payments to 2018 is a move in the right direction.

“It will result in less pressure on free cash flow (2016-17E) and paves the way for further restructuring.”

At 0920 GMT, KAZ shares were up 5.6% to 93.60p while Anto shares were 1.6% higher at 480.10p.