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RBC Capital downgrades Anglo American, cuts forecasts on Grosvenor fire
(Sharecast News) - RBC Capital Markets downgraded Anglo American on Thursday to 'sector perform' from 'outperform' and cut the price target to 2,600p from 3,100p.
It said the impact from the fire at the Grosvenor mine remains unknown, but it expects the event to delay the ongoing sale of the met coal division, removing one of the key near-term catalysts from the investment case.
It argued that given the uncertainty associated with the fire, it is likely that potential buyers will want to wait for more clarity or request a discounted price.
RBC said Anglo could go ahead and sell the rest of the mines in the portfolio. However, Grosvenor and Moranbah North - which together represent circa 35% of the total volumes - share processing infrastructure, making a separate sale of these two mines difficult.
"Modelling a 12-month stoppage and $500m repair costs reduces our FY24-26e EBITDA and net asset value forecasts by -3%," RBC said.
"We reduce our valuation multiples to reflect the failed BHP bid and risks associated with the fire which moves our price target to 2,600p."
RBC said it sees the outlook as more balanced in the medium term, hence the downgrade.
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