JPMorgan reiterates Overweight rating on Glencore stock, sees 20% upside

JPMorgan reiterated an Overweight rating on Glencore (GLEN) with a GBP3.60 price target, citing significant long-term growth potential despite the stock's 45% underperformance against MSCI Europe since May 2024 due to weak operating results and a 25%+ decline in coal prices. The firm forecasts substantial production increases, led by copper, in H2 2025, projecting group earnings to rise by approximately 150% in 2026 and 250% in 2027 compared to 2025 levels. JPMorgan also highlighted potential upside for coal prices given current unprofitable supply, and suggested a hypothetical coal de-merger could re-rate shares by 15-20%, contributing to a ~20% upside to their December 2026 price target.

Analysis

JPMorgan maintains a constructive outlook on Glencore Plc, reiterating an Overweight rating and a GBP3.60 price target, despite the stock's significant recent underperformance. The analysis highlights a 45% lag relative to the MSCI Europe since May 2024, attributed directly to weak operational results and a greater than 25% decline in coal prices. The investment bank's bullish thesis is forward-looking, centered on a substantial increase in group production anticipated in the second half of 2025, led by copper. This operational ramp-up is projected to drive exceptional earnings growth, with forecasts for group earnings to be approximately 150% higher in 2026 and 250% higher in 2027 compared to 2025. Furthermore, the analysis points to potential upside risk in coal prices over a 12-month horizon, noting that roughly 60% of global energy coal and 30% of steelmaking coal supply is currently cash-loss making. A hypothetical de-merger of the coal business is also presented as a potential value-unlocking catalyst, estimated to trigger a 15-20% re-rating for the shares, supporting the December 2026 price target which implies roughly 20% upside potential.

Key Decisions for Investors

• Investors with a long-term horizon could view the stock's recent significant underperformance as a potential entry point, based on the forecast for a major production-led earnings recovery beginning in H2 2025.
• Monitor copper and especially coal price trends, as a recovery in the latter is a key near-term catalyst and a 10% broader commodity price increase is modeled to unlock significant excess capital returns by 2026-2027.
• Pay close attention to any corporate announcements regarding a potential de-merger of the coal business, as this is identified as a specific catalyst that could independently drive a 15-20% re-rating of the stock.
• Weigh the execution risk associated with the ambitious production ramp-up against the potential for substantial earnings growth and a 20% upside to JPMorgan's price target.