Berenberg lowers target price on Anglo American ahead of December update

Berenberg said its main adjustments to the stock related to working capital builds, predominantly in its diamond business due to weak market conditions, and other working capital adjustments - such as an increase in receivables as its Quellaveco asset in Peru ramps up to full production.

The German bank stated its overall takeaway was that net debt was moving higher, with year-end net debt forecast to hit $9.9bn, broadly in line with consensus but sharply higher when compared to 2022's $6.9bn figure.

Berenberg also noted that weak commodity prices have affected cash from operations and that it forecasts a second consecutive year of working capital builds, which stands at roughly $4.0bn of working capital built in 2022-23.

"We adjust our model for the recent De Beers sales cycle result ($80.0m), reduce realised nickel prices and model higher interest rates. We push up our working capital build and lower our EBITDA multiple to 5th.0x (from 5.8x)," said Berenberg, which reiterated its 'hold' rating on the stock.

Reporting by Iain Gilbert at Sharecast.com