RBC Capital argues that the investment case for Glencore (LON:GLEN) has become more uncertain following a subpoena from the US Department of Justice (DoJ), WebFG News reports. The commodities giant disclosed yesterday that it was required produce documents relating to possible corruption and money-laundering. The documents relate to the group’s business in Nigeria, the DRC and Venezuela from 2007 to present.
Glencore’s share price, which tumbled following the news yesterday, has advanced in today’s trading, having added 0.56 percent to 322.80p as of 10:29 BST. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped marginally into the red and currently standing 0.12 percent lower at 7,584.36 points.
RBC weighs in on Glencore
RBC, which continues to see Glencore as an ‘outperform,’ with a price target of 410p on the shares, said yesterday that the US subpoena drove more uncertainty into the group’s investment case, which the analysts “find compelling from a valuation perspective, but increasingly challenged from a headline risk perspective,” as quoted by WebFG News.
The broker further said that while there was not enough detail in the release to understand exactly what the investigation was centred on, given that it covered multiple countries, it would indicate that there was a ‘relatively thorough’ probe taking place.
“We would expect that Glencore will use all legal means to defend itself and would highlight that there are no formal charges at this stage,” RBC concluded.
Other analysts on group
Goldman Sachs, which sees Glencore as a ‘buy,’ set a price target of 515p on the shares today, while Barclays, which also rates the commodities giant as a ‘buy,’ set a valuation of 450p on the stock. Liberum meanwhile reaffirmed the company as a ‘sell,’ without specifying a price target on the shares. According to MarketBeat, Glencore currently has a consensus ‘buy’ rating and an average price target of 424.11p