Antofagasta shares climb 3% after leading investment bank backs growth outlook

Antofagasta shares rose 3% after JP Morgan added the miner to its 'analyst focus' list with an 'overweight' rating and £24 price target, citing a projected 30% increase in copper volume growth between 2024 and 2028, outpacing peers. JP Morgan forecasts a significant improvement in Antofagasta's free cash flow, from negative 3% in 2025 to positive 7% by 2028, driven by rising copper and gold prices, falling input costs, and a growing copper supply deficit expected from 2027. The bank also raised its 2025 and 2026 group EBITDA estimates, anticipating further cost reductions and highlighting Antofagasta's appeal to long-term investors amid the clean energy transition.

Analysis

Antofagasta PLC (LSE:ANTO) shares experienced a 3% increase, rising 54p to 1,847.5p, following JP Morgan's decision to add the Chilean copper miner to its 'analyst focus' list and assign a 'positive catalyst watch' status, alongside a reaffirmation of its 'overweight' rating and a £24 price target. This endorsement is predicated on Antofagasta's projected industry-leading copper volume growth of 30% between 2024 and 2028, which JP Morgan anticipates will significantly outpace global peers and drive a substantial improvement in free cash flow (FCF). The bank forecasts a notable FCF turnaround, from a negative 3% yield in 2025 to a positive 7% by 2028, supported by expectations of rising copper and gold prices, coupled with declining input costs such as oil and treatment/refining charges (TC/RCs). Further bolstering this outlook, the recent environmental permit approval for the Zaldivar mine mitigates execution risk for 2025 copper production. JP Morgan also revised its group EBITDA estimates for Antofagasta upwards by 5% for 2025 and 1% for 2026, placing its forecasts 6% ahead of consensus. The bank projects Antofagasta's valuation to de-rate from approximately nine times estimated 2025 earnings to five times by 2028 due to enhanced cash generation and reduced capital expenditure. This outlook is set against a backdrop where JP Morgan foresees short-term copper surpluses in 2025-2026, followed by a growing supply deficit from 2027, potentially exceeding 3 million tonnes by decade-end, which would structurally support copper prices and Antofagasta's investment case, particularly for those seeking exposure to the clean energy transition.

Key Decisions for Investors

• Investors should consider the strong endorsement from JP Morgan, including the 'overweight' rating and £24 price target, which is underpinned by Antofagasta's projected 30% copper volume growth through 2028 and a significant expected improvement in free cash flow.
• It may be prudent to monitor Antofagasta's second-quarter production update on July 16th for potential downward revisions to cost guidance, given favorable trends in gold prices and input costs, which could serve as a near-term catalyst.
• Long-term investors might find Antofagasta appealing due to its expected valuation de-rating to five times earnings by 2028 and its strategic positioning to benefit from the anticipated structural copper supply deficit driven by the clean energy transition.