Credit Suisse downgrades Antofagasta to 'neutral'

19th Mar 2014 09:27

Copper producer Antofagasta was trading in the red on Wednesday after having its rating downgraded by Credit Suisse from 'neutral' to 'underperform' following the stock's outperformance over recent months. "With the positive of better-than-expected cost-cutting now played out together with heightened uncertainty around copper prices we downgrade the shares," the bank said.It said Antofagasta currently trades at a "sizeable premium to peers on almost every metric" and sees limited catalysts for the stock in the near term.Following the significantly bigger-than-expected dividend announced on Tuesday, Credit Suisse believes that another large payout is unlikely for at least the next two years. "We expect the company to move into a net debt position in 2015," it said."While ANTO benefits from good quality assets (second quartile of cost curve, long life) the company is entering a multi-year investment phase that will keep volumes relatively flat for the next two-three years and capex elevated through 2014/15 at least. Higher Chilean corporation tax and lower grades present medium-term risks, but should be largely anticipated by the market."The bank has retained its 750p target price for the shares.The stock was down 3.1% at 802.82p by 09:32 on Wednesday, suffering also from a downgrade by Deutsche Bank from 'hold' to 'sell'.BC