Morgan Stanley has lifted its rating on Glencore (LON:GLEN), arguing that the commodities giant’s shares ‘screen very attractively,’ Proactive Investors reports. The analysts, however, lowered their price target on the shares.
Glencore’s share price, which rose yesterday, has fallen deep into the red in today’s trading, having given up 1.22 percent to 337.35p as of 09:51 BST. The stock is underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.10 percent lower at 7,499.85 points. The group’s shares have lost about 1.4 percent of their value over the past year, as compared with about a three-percent gain in the Footsie.
Morgan Stanley lifts rating on Glencore
Morgan Stanley lifted its rating on Glencore from ‘equal weight’ to ‘overweight’ yesterday, while trimming its price target on the shares.
“With a 11.8% FCF yield on spot 2019 (adjusted for the regulatory risk, 13% reported) and 5.3% dividend yield the shares screen very attractively, we think,” the broker pointed out, as quoted by Proactive Investors. The analysts further noted that they believe the equity market is finally taking into account the geopolitical risks facing the company, while pointing out that improved cash flows from higher coal prices will offset the financial impact of such risks.
“The company is reacting to the improved valuation of its own equity by switching from opportunistic M&A to share buybacks,” Morgan Stanley said, adding that the fundamentals and commodity mix are unchanged and ‘look attractive’.
Other analysts on commodities giant
Citigroup and Deutsche Bank both reaffirmed Glencore as a ‘buy’ today, without specifying a price target on the shares. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 403.53p.