Glencore higher as American heavyweight throws is backing behind the miner

JPMorgan has reinstated coverage of Glencore (LSE:GLEN) with an 'overweight' rating and a £3.60 price target, signaling a potential turnaround after shares fell 45% since May last year. The bank anticipates a sharp production ramp-up, particularly in copper, in H2 2025, projecting earnings to jump 150% in 2026 and 250% in 2027 compared to 2025 levels. This positive outlook is further supported by promising cash returns, potential upside from a coal de-merger which could boost shares by 15-20%, and a potential rebound in coal prices, leading to a 2.4% rise in Glencore's shares.

Analysis

JPMorgan has reinstated coverage on Glencore PLC (LSE:GLEN) with an 'overweight' rating and a £3.60 price target, suggesting a potential inflection point for the stock after it underperformed the MSCI Europe index by 45% since May of the prior year. This underperformance was driven by weak results and a slump in coal prices of over 25%. The bank's bullish thesis is underpinned by expectations of a sharp production ramp-up in H2 2025, led by copper, which is forecast to drive earnings growth of 150% in 2026 and 250% in 2027 from the 2025 baseline. The capital return outlook is also highlighted as a key attraction, with an expected 6% yield this year and the potential for excess capital returns to reach 7% by 2026 and 20% by 2027, contingent on a 10% rise in commodity prices. A potential floor in coal prices is also suggested by the fact that a large portion of global supply is currently operating at a loss. A potential de-merger of the coal business is identified as a significant catalyst, with JPMorgan estimating it could boost the share price by 15-20% into the £3.50-£3.70 range, a view that contributed to a 2.4% rise in the shares to 304.88p following the report.

Key Decisions for Investors

• Given the strong earnings growth forecast and a new 'overweight' rating, investors could consider the current price a compelling entry point, with the £3.60 price target representing significant upside.
• Investors should closely monitor any corporate announcements regarding the potential de-merger of the coal assets, as this event is identified as a key catalyst that could unlock substantial shareholder value.
• While the outlook is positive, the most attractive excess capital return scenarios are contingent on a 10% increase in commodity prices, so investors should maintain a close watch on trends in copper and coal markets as a key variable for the investment thesis.