Why AngloGold's 41% Share Price Dip Is An Attractive Entry Point: Analyst

BMO Capital Markets analyst Raj Ray upgraded AngloGold Ashanti Limited AU to Outperform from Market Perform, raising the price target to $22 from $19.

The analyst applauds AngloGold's rationale for the corporate reorganization (re-domiciling to the U.K. and moving the primary listing to the U.S. from South Africa) in terms of targeting a jurisdiction with larger capital pools. 

Ray is bullish about AngloGold's new portfolio rationalization techniques, which can be further streamlined into a package of high-value assets with long life, large production, and low costs.

While the upcoming corporate restructuring could still present some uncertainties related to indexation and its impact, seen holistically, there is potential for a high-quality senior gold producer to emerge from the corporate reorganization, asset optimization, and portfolio rationalization process, Ray adds. 

AngloGold currently trades at a slight discount to peers, Ray notes.

Following the unexpectedly strong stock performance earlier this year, AngloGold's share price is down ~41% from its May 2023 peak and presents a more attractive entry point, notes the analyst.

Following recent operational challenges, Ray is more optimistic about gradually improving operating performance with the company's asset optimization program in the implementation phase. 

The analyst sees potential for streamlining AngloGold's portfolio into a Tier 1 + Nevada package of high-value assets with long-life, large-scale, and low-cost.

Based on the above, the analyst raised FY23 EPS estimate to $1.62 from $1.54, while for FY24, the analyst raised the EPS estimate to $1.07 from $0.87.

Price Action: AU shares are trading higher by 3.56% to $17.75 on the last check Tuesday.