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Investing.com -- Barclays (LON: BARC ) in a note dated Tuesday has lowered its price target for Anglo American (JO: AGLJ ) plc to 2,880p, a 4% reduction from its previous valuation.

Shares of the mining company were down 3.3% at 08:30 ET (13:30 GMT).

Analysts at Barclays attributed the adjustment to ongoing restructuring efforts within Anglo American, which are expected to drive long-term value but present near-term uncertainties.

The revision follows Anglo American’s strategic restructuring, which includes asset sales, cost-cutting initiatives, and a renewed focus on core mining operations.

Barclays’ analysts maintain an "overweight" rating on the stock, indicating confidence in the company’s long-term growth potential despite the price target reduction.

A key factor influencing Barclays' decision is the company’s plan to implement annual cost savings of approximately $800 million by the end of 2025.

This figure, while crucial, has yet to be fully reflected in market valuations, according to the analysts.

The restructuring involves the divestment of Anglo American Platinum (Amplats), the sale of steelmaking coal assets, and the potential separation of De Beers, among other initiatives. These moves are aimed at streamlining operations and enhancing shareholder value.

Barclays flagged that while these efforts could result in a more profitable and efficient company, they also bring short-term challenges, including potential volatility in earnings and the risk of execution delays.

The brokerage’s revised sum-of-the-parts analysis suggests Anglo American’s post-restructuring valuation implies upside, with analysts noting that the company’s shares continue to trade at a discount to their estimated intrinsic value.

Market speculation regarding a potential takeover bid by BHP has also been a factor in the stock’s recent movements.

Anglo American’s share price had seen an uptick in the months leading up to the end of 2024, partly driven by rumors of renewed interest from the Australian mining giant.

However, recent reports suggest that BHP’s enthusiasm for a deal has cooled, removing an element of speculative support for Anglo’s stock.

The company's latest financial projections indicate a mixed outlook. While post-restructuring estimates show improved margins and higher returns, absolute EBITDA figures for 2026-28 are projected to be 22-26% lower than pre-restructuring levels.

Capital expenditures are expected to decline, reducing financial strain and improving free cash flow yields in the coming years.

Despite the price target reduction, Barclays’ analysts maintain that Anglo American remains a strong investment proposition.

They argue that the execution of its restructuring plan should help close the valuation gap, particularly as the company transitions towards a more focused portfolio centered on copper and high-grade iron ore assets.

The shift is expected to position Anglo American favorably amid the growing global demand for these critical commodities.