Monday, April 07, 2008; Posted: 03:17 AM
In a note to clients, Goldman Sachs pointed out that prevailing high base and platinum group metal prices combined with higher-than-expected bulk metal contract settlements means that it expects its coverage universe to again generate record cash flows in 2008.
The broker said that its economists' view of stronger economic activity in 2009 translates into tight metals markets and rising base metal and iron ore prices.
These combine with higher production to lift cash returns and cash flows making 2009 valuation metrics appear very compelling, added the broker.
Goldman Sachs said it has lifted its rating on Vedanta Resources to 'buy' from 'neutral' while raising its target price to 2,630 pence from 2,340 pence, it has lowered its recommendation on Boliden to 'sell' from 'neutral' while lifting its target to 69 skr from 64 skr.
The broker said that it sees particularly high value in stocks in its coverage that have lagged in terms of performance and have undergone a sector relative de-rating versus stocks that have been involved in ongoing M&A transactions or speculation.
Goldman Sachs said that it believes Anglo American has been overlooked by investors on this basis and that it currently offers the most upside to fundamental fair value within the sector.
The broker noted it has removed the Not Rated designation from Anglo American, now rating it 'buy', while adding the shares to its Conviction Buy List with a 3,945 pence target.
tf.TFN-Europe_newsdesk@thomson.com tw/jlw
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