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Investing.com -- Bernstein Research downgraded commodities giant Glencore Plc (LON:GLEN) to “market-perform” from “outperform,” citing stretched valuation, potential shortfalls in copper production, and growing political uncertainty in Argentina.
The brokerage trimmed its price target to £375 from £385, offering about 9% upside from Glencore’s latest close of £344.40 on October 21.
The company’s shares have already climbed 23% since early August, a move that analysts said has outpaced gains in its underlying commodities and left the stock “fairly valued.”
The report, led by analysts Bob Brackett, Ph.D. and Andrianto Guntoro, said Glencore’s ambition to ramp copper production by 50% in the second half of 2025 is at risk, particularly at its Katanga (KCC) operation in the Democratic Republic of Congo.
Bernstein estimated half-year copper production at 483 kt, versus company guidance of 506 kt and consensus expectations of 497 kt.
“Grade uplift alone will likely be insufficient to reach the low-end of guidance,” the analysts said, noting that KCC would need a 29% recovery uplift on top of a 56% grade improvement to hit targets.
“Given that power disruptions have been featured in Q1 and Q2 production results, we believe a 29% recovery uplift at KCC may not be attainable,” the analysts added.
At current levels, Glencore trades at 5.6× FY26 EBITDA, one standard deviation above its five-year average of 4.9x, suggesting limited room for multiple expansion.
Bernstein said more than half of the company’s forecast FY26 EBITDA will come from copper and zinc, whose prices have already risen 22% and 4% respectively this year.
The analysts added that they “don’t see material upside from met coal and thermal coal prices,” which together account for 20% of FY26 EBITDA.
Bernstein also pointed to rising political instability in Argentina, where Glencore holds two major copper growth projects, MARA (250 kt) and Gran Pachón (up to 750 kt), that together represent roughly twice its current copper output.
The brokerage warned that the October 26 midterm elections could pose risks to these long-term investments, as President Javier Milei’s coalition trails in polls.
The analysts cited Glencore’s own statement from August that “President Milei and his administration must be credited for introducing the RIGI. This framework has changed the investment landscape in Argentina.”
Despite expected FY26 EBITDA growth of 51% and a projected dividend yield rising from 1.8% to 3.9%, Bernstein said valuation and external risks outweigh near-term catalysts.