Will Antofagasta meet production targets?

Antofagasta is due to report its first-half figures for 2014 on Tuesday. The consensus is for revenue of $2.7 billion and an operating profit of $908 million.

A mining truck
Source: Bloomberg

Antofagasta is trading at £8.05; the stock is down 5.5% since it announced its full-year figures for 2013 in March. The profits missed estimates but the dividend exceeded analysts’ forecasts.

Last financial year, the miner posted record productions levels but the slump in the price of copper affected its bottom line. It has been difficult for the mining sector as metal prices are not what they once were and costs continue to climb; last year the cost of extracting copper rose by 10%.

In March, the company outlined its full-year copper production target for 2014 of 700,000 tonnes. With the hopes of ramping it up to 900,000 tonnes by 2018, dealers will be wondering if this guidance is maintained.

Analysts are a touch on the bearish side when it comes to Antofagasta’s outlook. Out of the 31 recommendations, six are buys, 15 are holds and 10 are sells.

If the share price drops below £8 the next level to watch for is £7.60. However, if the full-year guidance is upped the stock could target £8.40.

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. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.