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Why Analysts Have Been Turning Bullish on Glencore


Dec. 8 2017, Updated 10:55 a.m. ET


According to consensus estimates compiled by Thomson Reuters, Glencore (GLEN-L) has a mean one-year price target of 408.78 pence, a 21.3% upside over its closing price on December 6. Glencore has received “strong buy” ratings from four of the 25 analysts surveyed by Thomson Reuters on December 6, while 15 analysts have rated it a “buy” or some equivalent. Six analysts have given Glencore a “hold” rating, and one analyst has given the stock a “strong sell” rating.

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Recent action

On December 5, BMO Capital upgraded Glencore from “market perform” to “outperform.” The brokerage also raised Glencore’s price target from 300 pence to 400 pence. On the same day, Citi maintained its “buy” rating on Glencore. Citi also raised Freeport-McMoRan’s (FCX) price target, as noted in the previous part of this series. The brokerage also upgraded other mining companies, including BHP Billiton (BHP) and Rio Tinto (TRQ) (RIO). Last month, Independent Research and JPMorgan raised Glencore’s price target. However, KBW cut Glencore from “market perform” to “underperform.”

Key drivers

Glencore is a diversified metals and mining company producing metals, agricultural commodities, and energy. The company also has a marketing arm. Glencore is the largest zinc producer and among the top five copper producers globally. Both copper and zinc have been strong in 2017 led by the supply deficit story. Glencore expects to produce between 1.29 million metric tons and 1.32 million metric tons of copper this year.

Exposure to metals that have better demand-supply dynamics could be making some analysts turn bullish on Glencore. In the next part, we’ll see how Glencore could benefit from vehicle electrification.


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