Broker snap: Limited further upside at Antofagasta, says Canaccord Genuity

12th Mar 2013 10:07

Canaccord Genuity has retained its 'hold' rating and 1,175p target price for copper miner Antofagasta following its full-year results, saying that shares are unlikely to continue to rise without an improvement in copper prices.Earnings before interest, tax, depreciation and amortisation (EBITDA) came in at $3.83bn in 2012, slightly ahead of Canaccord's $3.8bn estimate, while adjusted net income of $1.38bn was under the $1.4bn forecast.Antofagasta also decided to pay a full-year dividend per share (DPS) of 98.5 cents (comprising 21 cents ordinary DPS and a special DPS of 77.5 cents). Canaccord was expecting a 122 cents payout.On an enterprise value-to-EBITDA valuation, the broker said the stock trades at 5.6 times (2013) and 5.2 times (2014) mulitples, slightly higher than its 12-month forward average of 5.1. On the final and special dividend announced, the shares are trading at a yield of 5.5%.Analyst Peter Mallin-Jones said: "Our expectation of a further substantial special dividend for 2013 means we continue to expect ANTO to trade at an elevated multiple versus its history, giving a dividend yield of 6.0% if the 2012 special is repeated and rising to 7.3% if it is increased to 100cts. "However, we see limited further upside without further copper price upside driving higher free cash flows and the potential for even larger dividends in the next 12 months.Shares were up 4.52% at 1,144.5p by 10:52 on Tuesday.BC