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Are Analysts Bearish or Bullish on Glencore?

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Glencore

According to consensus estimates compiled by Thomson Reuters, Glencore (GLNCY) has a mean one-year price target of 3.78 British pounds, representing an 8.9% upside over its closing price on September 22, 2017. Glencore’s primary listing is on the London Stock Exchange (EWU) (UKX-INDEX), and the stock is denominated in the British pound.

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Analysts’ recommendations

Glencore has received “strong buy” ratings from four analysts polled by Thomson Reuters on September 22. Twelve analysts gave a “buy” rating on Glencore, and one analyst gave Glencore a “sell” rating. The remaining nine analysts gave “hold” ratings on Glencore. Overall, analysts are reasonably bullish on Glencore.

There have been some recent changes in analysts’ recommendations for Glencore. On September 15, UBC cut Glencore from a “buy” to “neutral” while raising its target price from 3.5 pounds to 3.7 pounds. However, on September 5, J.P. Morgan cut Glencore’s target price from 3.3 pounds to 3.1 pounds.

Diversified operations

While companies like Freeport-McMoRan (FCX) and Southern Copper (SCCO) are predominantly copper producers (BHP), Glencore’s operations are diversified. Copper, zinc, coal, and agricultural products are the key commodities that Glencore sells. Along with production, Glencore is also involved in commodity trading. You can read Glencore: An Investment Overview of a Mining Giant for Glencore’s business overview.

In 2015, doubts surfaced about Glencore’s survival amid a crash in commodity prices. Glencore’s high leverage ratios combined with near-term debt maturities made it a favorite of market bears in 2015. However, the company’s leverage position has improved since then. You can read How Copper Miners’ Debt Positions Stack Up for a comparative analysis of copper miners’ financial leverage.

In the next article, we’ll see how analysts are rating Freeport-McMoRan.

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