Anglo American <AAL.L>: Jefferies raises target price to 5,000p from 4,200p

Jefferies has raised its price target for Anglo American (AAL.L) to 5,000p from 4,200p, maintaining a "buy" recommendation for the stock. The upgrade reflects the firm’s confidence in Anglo American’s ongoing restructuring efforts, improved operational performance, and potential for merger and acquisition activity. Jefferies highlighted that Anglo’s shares trade at a 15% discount to their sum-of-the-parts valuation, offering attractive value despite the risks associated with its transformation.

The restructuring includes the planned demerger of Anglo American’s stake in Anglo American Platinum and the recent sale of its metallurgical coal business, expected to generate up to $4.1 billion depending on coal prices and operational milestones. The complete demerger of Amplats is scheduled for 2025 and is viewed as a key catalyst for the stock.

Jefferies also noted Anglo American’s improved production and cost efficiencies, along with a favorable outlook for iron ore and copper prices. These factors, combined with the potential for M&A interest, underpin the firm’s upgraded stance. Investors are advised to monitor the progress of the restructuring and the realization of value from these strategic moves.