Swiss broker UBS lifted its price target on mining major Anglo American (LON:AAL) saying it is attracted to the group's cost cutting, restructuring and growth potential.
The 12 month target moves to 1,650p from 1,580p previously. The broker has a 'buy' rating on the shares.
In its 2013 full year results posted on February 14, the miner revealed weaker metal prices were offset by better operational performance and currency gains (as currencies were weaker where it operates).
Underlying profit was up 6% at US$6.6bn and margins improved; however, at US$2.7bn the group’s earnings were 7% lighter than the previous year.
Myles Allsop, analyst at UBS, said the broker had upgraded its 2014 earnings for the company to reflect the better than expected cost performance and volumes in H2-13.
"However, we do not expect a material recovery in earnings until 2016, when Minas Rio is fully ramped up, especially given waste removal at Kumba.
"We see upside potential near-term if diamond prices increase further, and if there is a material step up in PGM prices (albeit some recovery is already in UBSe). We expect further restructuring actions to be announced over the next 12 months," he said.
He notes that the group is up 20% over a month and outperformed FTSE 100 by 22%.
"We are attracted by the cost cutting/ restructuring/ growth potential," he said, which underpinned a material recovery in EPS in 2015/16 estimates.
Shares dipped today 0.85% to 1,573.5p.