Broker snap: Antofagasta rally has gone far enough

6th Jan 2011 12:52

Nomura has downgraded Antofagasta from a 'buy' to 'reduce' as it struggles to find value in the copper miner which has more than doubled over the last six months.Since January 2009, the Japanese broker has viewed copper as the most attractive recovery exposure, with Chile-based Antofagasta being its top pick.But while copper prices are expected to enjoy further short-term upside, analyst Paul Cliff says "many pure copper equities now price in an over-optimistic long-term outlook.""We think the risk to our forecasts is that copper prices experience an even more aggressive short-term price 'spike', fuelled by the introduction of copper exchange-traded funds but also with a much greater risk of a boom-bust scenario similar to the nickel market in 2006-07," he adds.Nomura's preferred picks for copper exposure are First Quantum ('buy': target price of C$120) and Xstrata ('buy': target price of 1,800p).