J.P. Morgan resumes Glencore coverage with “overweight,” £3.60 price target

J.P. Morgan has resumed coverage of Glencore with an "overweight" rating and a £3.60 price target for December 2026, implying a potential 20% upside. The upgrade is driven by expectations of improving production, significant capital returns, and strategic flexibility, forecasting a strong recovery in H2 2025 led by copper output and substantial earnings growth of 150% in 2026 and 250% in 2027 versus 2025. Despite past underperformance due to coal prices, J.P. Morgan sees potential for price support given cash losses in global coal supply and suggests a hypothetical coal de-merger could act as a 15-20% rerating catalyst, highlighting Glencore's value-accretive strategic optionality as a two-year merger restriction ends.

Analysis

J.P. Morgan has resumed coverage on Glencore with a constructive outlook, issuing an "overweight" rating and a December 2026 price target of £3.60, which implies a 20% upside from current levels. The brokerage's thesis is anchored on a significant operational and financial turnaround following a period of underperformance where the stock lagged the MSCI Europe index by 45% since May 2024, primarily due to weak production and a greater than 25% drop in coal prices. A strong recovery is anticipated to begin in the second half of 2025, propelled by a substantial increase in copper output, which is forecast to drive group earnings growth of approximately 150% in 2026 and 250% in 2027, relative to 2025. The investment case is further supported by projected capital returns equivalent to 6% of market capitalization in 2025 and significant strategic optionality. While coal has been a drag, J.P. Morgan notes that with a large portion of global supply operating at a cash loss, price support may emerge. Furthermore, a hypothetical de-merger of the coal business is identified as a potential rerating catalyst that could lift the valuation by 15-20%, a strategic move now possible after a two-year restriction from the Viterra-Bunge merger has expired.

Key Decisions for Investors

• Investors may consider the recent underperformance as a potential entry point, given the forecast for a sharp earnings recovery beginning in H2 2025 and a price target implying 20% upside.
• Monitor for two key catalysts: a cyclical recovery in coal prices from current unsustainable levels and any corporate action towards a de-merger of coal assets, which could unlock a 15-20% valuation rerating.
• Factor in the company's high sensitivity to commodity markets, as a 10% price increase could generate significant excess capital, but a downturn presents a material risk to the earnings outlook.
• Consider the tangible shareholder returns, as Glencore is projected to return approximately 6% of its market capitalization to investors in 2025, providing a yield component to the turnaround story.