Antofagasta Shares Cut to Sell as Valuation Hits Highs

Antofagasta (LON: ANTO) shares gained on Tuesday despite Morgan Stanley cutting its rating to Underweight, arguing that the miner’s valuation has climbed to levels that no longer justify the risk.

The bank trimmed its price target slightly to 3,050p from 3,070p, saying the company’s premium to peers has reached “historical highs,” skewing the risk-reward profile against investors.

The downgrade follows a sharp rally in the stock, which is up more than 17% so far this year and has surged 132.8% over the past 12 months.

Antofagasta hit a record high of 4,176p last week before easing back to around 3,868p. Despite Tuesday’s call, the shares jumped more than 6% as gold and silver prices rebounded, highlighting the volatility driving recent trading.

Morgan Stanley’s move adds to a growing list of valuation-focused downgrades. UBS cut the stock to Neutral last week, raising its price target to 4,200p but warning that Antofagasta had significantly outperformed sector benchmarks. The bank also cited stretched valuation metrics as the primary reason for stepping back from its previous Buy rating.

The miner’s rally has been fuelled by strong metals prices and investor positioning, but both Morgan Stanley and UBS signalled concerns that the pace of gains has outstripped fundamentals.

With Antofagasta still trading near elevated levels, the latest downgrade highlights a shift in sentiment as major banks question whether the stock’s premium has reached its limit.