Broker snap: JPM trims Antofagasta price target
A review of copper prices has prompted JP Morgan to cut its price target on Antofagasta to 760p from 787p and keep its 'underweight' rating on the South America-focused miner.
"In spite of having raised our copper price forecasts, in recognition of recent strength, we still believe that copper is more likely to embark on a medium term downtrend in the second half of 2008 than on an uptrend," JPM said.
The broker said it puts a 10% probability on copper hitting $12,000 a tonne over the next two years and a 60% probability on it reaching $5,000 a tonne.
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It noted that Antofagasta is currently trading at higher price/earnings ratio to the average among the UK diversified miners it covers.
"Those odds do not stack up well for a producer like Antofagasta," JPM said. "In the past nine months the group's share price has traded actively in a band between 600p and 800p and it now finds itself once more at the top of that band. From a trading perspective, therefore, we would see prices above 800p as particularly attractive selling territory in the light on our ongoing underweight recommendation on the group."
