Glencore Shares: Analyst Sees ‘Significant Inflection in Shareholder Returns’

Glencore (LON: GLEN) shares were upgraded by analysts at Barclays in a note this week, citing a potential inflection point in shareholder returns.

In a research note, the bank's analysts lifted Glencore to Overweight from Equal Weight and raised their price target for the stock to 550p from 510p per share.

Barclays told investors that it sees Elk Valley Resources as an attractive acquisition that will provide significant leverage in a tightening coal market.

Earlier this month, Glencore said it had secured the final regulatory hurdle for its acquisition of a 77% stake in Elk Valley from Teck Resources. In November 2023, Glencore announced it had entered into an agreement with Teck Resources Limited for the 77% stake in the entirety of Teck's steelmaking coal business for $6.93 billion in cash. 

Barclays said its analysis shows that the acquisition is expected to boost Glencore's EBITDA from 2024 to 2026 substantially. 

With a coal spin-off unlikely, the bank's analysts wrote that they see a “significant inflection in shareholder returns” into 2025.

While Barclays remains bullish on Glencore shares, analysts at BMO Capital became more cautious this week, resuming coverage of the company's stock with a Market Perform rating, down from the previous Outperform rating.

The firm, which also lowered its target for the stock to 540p from 570p, took a different view on the Elk Valley deal, saying the transaction likely limits near-term shareholder returns.

However, they also feel this should change through 2025. BMO told investors in a note that it doesn't expect the coal business to be demerged.