Glencore upgraded to ‘buy' by UBS on stronger trading and coal outlook

Glencore PLC (LSE:GLEN) won an upgrade to ‘buy’ from ‘neutral’ at UBS, which raised its target to £6.50 from £6.20 on stronger trading and coal prospects.

UBS raised its EBITDA forecasts by 5% for 2026 and 7% for 2027, reflecting higher coal price realisations and marketing profitability.

The broker raised its 2027 marketing EBIT forecast to $4.3 billion from $3.0 billion, assuming favourable trading conditions persist into the first half of next year.

At spot commodity prices, UBS estimates 2027 free cash flow of about $10 billion, implying an 11% yield. It considers Glencore attractively valued at an enterprise value below five times EBITDA.

Glencore's commodity basket has risen about 20% this year, according to UBS, while strong energy trading conditions underpin its optimism. Alongside trading and commodity prices, its five positives include improving visibility on copper growth, potential disposals and higher shareholder returns.

Potential sales of Kazzinc and Bunge stakes and 40% of Glencore's Congolese interests could generate over $10 billion, UBS estimates. It expects a $1.6 billion base distribution and $2.5 billion top-up to be announced with the 2026 results in February 2027.

However, the broker expects challenges in self-financing Glencore's $23 billion copper programme, leaving some projects unapproved or with diluted ownership stakes. UBS highlights a market value decline exceeding $10 billion, compared with Radiant World's $2 billion claim, which Glencore considers meritless.