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On Thursday, RBC Capital Markets adjusted its outlook on Glencore Plc (OTC:GLNCY), a leading commodity trading and mining company. The firm’s analyst Srivathsan Manoharan revised the price target downward to GBP 4.40 from the previous GBP 4.80. Despite this change, the analyst maintained an Outperform rating on the company’s shares.
The modification in the price target comes after Glencore (LON:GLEN) reported its fiscal year 2024 results, which revealed a slight miss on earnings before interest, taxes, depreciation, and amortization (EBITDA). Additionally, the company announced larger than expected cuts to its production guidance. Another factor contributing to the revised price target is the lighter than anticipated capital returns, which include the future disposal proceeds from Viterra, pending final regulatory approval.
In his comments, Manoharan noted that Glencore’s management is actively considering a move to list the company’s shares on the New York Stock Exchange (NYSE). However, he expressed skepticism about any potential valuation uplift from such a move. The analyst highlighted that coal trading multiples are currently low globally and that Glencore’s headquarters in Switzerland, along with its current listing in London, position it alongside its most relevant peer group—large-cap diversified miners—and afford it nearly universal positive recommendations from sell-side analysts.
Manoharan’s continued endorsement of an Outperform rating for Glencore is based on the outlook for thermal coal and the potential for the company to be a takeover target. Despite the lowered price target, the analyst’s stance suggests a belief in the company’s strong fundamentals and future prospects. Glencore’s stock performance and investor sentiment will be watched closely as the market digests these updates.
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