UBS Buys into Glencore Upgrade
UBS has upgraded Glencore to 'buy' from 'neutral', citing a more attractive risk-reward profile following the company's recent decline. The broker raised its 12-month price target to 650 pence from 620 pence, with shares currently trading at 549 pence.
The upgrade is based on stronger performance in Glencore's Marketing division, rising commodity prices, better visibility on growth, progress on asset disposals, and higher shareholder returns. UBS raised its 2026 and 2027 EBITDA estimates by 5% and 7%, respectively, mainly reflecting higher Marketing earnings and coal price assumptions.
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. It also sees further upside risk to its 2026 and 2027 thermal and met coal forecasts due to supply disruptions and resilient demand.
Glencore's commodity basket is up about 20% year-to-date, with met coal and copper gaining around 30% and 12%, respectively. The Radiant World dispute has had a negative impact on the company's shares, which have fallen over 10% since late August.