This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Antofagasta (full-year earnings 14 March)
Like many mining stocks, Antofagasta has rallied strongly over the past year, but in the last couple of months we have seen around 17% shaved off the share price. However, the improved pricing outlook seems to offer better times ahead. Cost-cutting and a reduction in operations has helped to ease the pressure on margins, and the expectation is that pre-tax profit will surge to over £700 million in 2016, from just over £200 million a year earlier. In addition, dividends are expected to recover as the miner seeks to return cash to shareholders. Moreover, dividend cover is 2.9 times so there is little risk of a drop in payouts any time soon.
The pullback over the past month or so has put a dent in the uptrend, but leaves it intact. Any recovery back above £7.80 would be the signal that the dip is over and more gains are on the way. A daily close below £7.22 would suggest further weakness, in the direction of £6.50.
.jpg)
