Glencore PLC (LSE:GLEN) shares topped the FTSE 100 leaderboard on Wednesday as Deutsche Bank upgraded its rating on the stock due to the potential for extra shareholder returns, while other analysts cited improving copper and coal markets.
Deutsche upped its rating on the Swiss commodities giant to 'buy' from 'hold' with a 540p share price target.
“We expect the market focus to shift towards the upcoming completion of the EVR acquisition and a decision on whether or not to proceed with the CoalCo demerger," said Liam Fitzpatrick, head of metal and mining equity research at Deutsche Bank.
“We believe there is a growing chance that the planned separation is deferred and, if so, Glencore will again become the leading cash generator in the sector.”
Glencore acquired Teck's steelmaking coal business Elk Valley Resources (EVR) last November for $7 billion.
A potential $2 billion to $3 billion in cash returns to Glencore shareholders could arise in the second half of the financial year, the analyst predicted.
Elsewhere, investment bank Jefferies also issued a 'buy' note, saying "the investment case is improving sooner than expected as copper breaks to the upside and thermal coal markets appear to be stabilizing".
Glencore shares are currently 13% lower year to date at 410p.