Berenberg lowers target price on Anglo American

Berenberg noted that Anglo American's latest investor update on 9 December included downgrades to production guidance across the business that the "severity and longevity" of which had taken both it and the market "somewhat by surprise".

The German bank stated that based on revised production and cost guidance, 2023 consensus earnings per share need to come down by "at least" 5-10%.

"The impact of the estimates on an unchanged price deck, which we are reviewing, places our 2023E EPS circa 23% below current consensus estimates," said Berenberg.

However, moving into 2023, Berenberg said the macro outlook now appears to be "brighter" and reiterated its 'hold' rating on the stock.

"We think commodity markets (and prices) can perform better than what is currently expected, particularly due to supply disruptions in commodities such as iron ore and copper, which have been subject to a flurry of production guidance downgrades by peers," said the analysts.

"Overall, we view the update as disappointing, and our estimate changes are reflective of this; however, as we have previously stated, we think that the tailwind of investors seeking exposure to the mining sector is likely enough to outweigh the headwinds of weaker operational and cost performance from the miners."

Reporting by Iain Gilbert at Sharecast.com