Overview
BofA Global Research downgraded Anglo American to a "neutral" rating on Friday, even as the brokerage nudged its price objective higher to 3,600 GBp from 3,500 GBp. The shares were trading at 3,560 GBp at the time of the report.
Valuation and upside
The bank said the downgrade reflects what it sees as limited upside from current levels after a sharp rerating of the stock. In its updated sum-of-the-parts exercise, BofA applies relatively high multiples to Anglo American's copper portfolio - specifically 8x to 10x EV/EBITDA - anchored to peak earnings years in 2027 and 2028. That approach, the report argues, leaves less room for the stock to outperform in the near term compared with other ways of gaining exposure to copper.
On a standalone basis and before the proposed Teck Resources combination, BofA noted that Anglo displays a comparatively low free cash flow yield and elevated EV/EBITDA multiples versus peers. The brokerage's projections show a free cash flow yield of negative 1% in 2025, improving to 1.6% in 2026. Enterprise value-to-EBITDA is forecast at 11.7 times in 2025, declining to 10 times in 2026. According to the report, these metrics make the shares less attractive following the recent rally.
Merger timing and expected synergies
BofA reiterated its support for the announced merger of equals with Teck Resources but flagged timing as a material consideration behind the downgrade. The bank pointed out that the deal's targeted completion in Q4 2026 or Q1 2027 means it will be some time before identified synergies feed into earnings.
BofA's estimates put near- and medium-term synergies at about $800 million, largely from consolidating central functions, with further longer-term synergies of about $700 million related to shared assets at Collahuasi and QBII. The brokerage said these benefits are unlikely to materially affect earnings in the near term.
Restructuring and asset sale uncertainty
Ongoing restructuring adds another layer of uncertainty, according to BofA. The bank highlighted the failed sale of Anglo American's remaining coking coal assets to Peabody Energy following an ignition event at the Moranbah mine, a development that has forced Anglo to restart the sales process.
BofA also flagged ambiguity surrounding the valuation and potential separation of De Beers. The report notes Anglo has indicated a review of De Beers' carrying value of about $4 billion amid market pressure stemming from increased Angolan supply and competition from lab-grown diamonds.
Earnings revisions but valuation already reflects gains
Despite the more cautious rating, BofA raised its earnings estimates for Anglo American. The brokerage lifted its 2025 adjusted EPS forecast to $0.86 from $0.78 and its 2026 forecast to $1.52 from $1.30. Even so, BofA said the stock's current valuation already incorporates those improvements, supporting a more neutral stance.
Implications
In sum, the BofA report balances higher near-term earnings estimates with concerns about stretched valuation multiples, the delayed arrival of merger synergies, and unresolved asset-sale and valuation issues that introduce execution risk. These factors collectively underpin the decision to move to a neutral rating despite a higher price objective.