UBS upgrades Glencore as commodity gains boost earnings outlook

Investing.com -- UBS upgraded Glencore to "buy" from "neutral", citing a more attractive risk-reward profile after the stock’s recent decline on macro concerns, weaker coal prices and governance issues linked to its dispute with Radiant World.

The broker raised its 12-month price target to 650 pence from 620 pence. Glencore shares closed at 549 pence on Thursday.

UBS said stronger performance in Glencore’s Marketing division, rising commodity prices, better visibility on copper growth, progress on asset disposals and higher shareholder returns support the upgrade.

The broker raised its 2026 and 2027 EBITDA estimates by 5% and 7%, respectively, mainly reflecting higher Marketing earnings and coal price assumptions. It sees about 15% upside to consensus 2027 EBITDA at spot prices.

UBS said Glencore’s commodity basket is up about 20% year-to-date, with thermal coal, met coal and zinc each gaining around 30% and copper up about 12%.

It sees further upside risk to its 2026 and 2027 thermal and met coal forecasts, citing supply disruptions and resilient demand.

The bank expects Glencore to generate about $10 billion of 2027 free cash flow at spot prices, equivalent to an 11% free cash flow yield.

Glencore’s shares have fallen more than 10% since late August as the Radiant World dispute escalated.

Radiant filed a $2 billion legal claim on Sept. 15, while Glencore has said its exposure to Radiant and related companies is not material and that it considers the claims meritless.

Original Article

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