UBS downgraded Antofagasta to "neutral" from "buy", causing the stock to drop over 6%. This decision follows a substantial rally, with shares up approximately 135% in the last year. The brokerage cited limited near-term growth potential as the primary reason for the downgrade, despite a positive outlook for future copper production.

UBS analysts indicated that the company's valuation had expanded, with its forward EV/EBITDA multiple increasing. The re-rating was attributed to progress in de-risking the Centinela Growth Project, expected to start in 2027. Despite the downgrade, UBS raised its price target to £42 per share, reflecting higher earnings forecasts and a higher valuation multiple.

The firm expects copper production to grow and anticipates unit costs to benefit from higher volumes and stronger by-product prices. Net cash costs are estimated at $1.20 per pound in 2026-2028. Free cash flow and cash returns are also predicted to improve from 2027 as capital expenditure decreases.

This downgrade reflects a shift in market sentiment. While copper prices are generally strong, UBS believes that Antofagasta's share price has outpaced the rally. Investors should watch for the impact of the Centinela project's progress and any further shifts in the copper market. The company also offers a dividend yield of around 5%.