Deutsche Bank has turned bullish on Glencore (LON:GLEN), pointing to the miner’s high cashflow, growth potential and exposure to the analysts’ ‘preferred commodities’. The comments come after analysts at Jefferies recently reaffirmed the blue-chip group as a ‘buy,’ arguing that it was ‘nearly ideally positioned’ for an ongoing bull market in mining.
Glencore’s share price slipped into the red in the previous session, shedding 0.88 percent to close at 344.10p, underperforming the broader UK market, with the benchmark FTSE 100 index 0.13 percent lower at 7,301.29. The group’s shares have added more than 62 percent of their value over the past year, and are up by just under a fifth in the year-to-date.
Deutsche Bank lifted its rating on Glencore, from ‘hold’ to ‘buy’ and hiked its price target on the shares from 300p to 420p, pointing to three core drivers for the upgrade, including exposure to the analysts’ preferred commodities.
“The company has the most diversified commodity portfolio and the highest exposure to commodities geared to the growth in electric vehicles – copper, cobalt and nickel. Medium term we remain bulls on copper and zinc,” the broker’s analyst Liam Fitzpatrick explained, as quoted by Citywire, further pointing to Glencore’s cashflows that will ‘sustain out to 2020’ and an improved pricing outlook which “comes at a time when considerable headway in reducing operating and capital cost has been made”.
The analysts noted that the third driver was the growth options available, with Glencore “more comfortably positioned than peers; latent capacity options in copper and zinc can keep organic volumes growing to 2020 and group capital expenditure levels contained”.
Deutsche Bank meanwhile turned bearish on FTSE 100 peer Anglo American (LON:AAL), pointing to the miner’s recent stock outperformance.