UBS has downgraded Glencore PLC (LSE:GLEN) to 'neutral' after a strong run in the shares and a view that the next phase of returns will be harder to earn.
The broker has lifted its 12-month price target to 425p from 410p, but with the shares already at 382p it sees limited upside of about 11%. The stock is up more than 30% over the past six months.
The downgrade reflects concern that Glencore’s copper leverage is weaker than many investors assume. UBS expects a modest year on year rise in EBITDA in 2026, helped by higher copper prices.
That gain is likely to be partly offset by lower copper volumes. Around 65% of group EBITDA comes from coal, zinc and the marketing division, which UBS expects to be broadly flat next year as prices come under pressure.
UBS remains positive on the outlook for copper prices. However, it prefers more direct exposure through copper-focused miners rather than diversified groups. Copper accounts for about a third of Glencore’s EBITDA.
By contrast, peers such as Anglo American Teck have around 70% exposure, while Antofagasta and Freeport McMoRan are above 80%.
Coal and zinc are key areas of caution. UBS expects seaborne thermal and metallurgical coal prices to be range bound in 2026.
Metallurgical coal faces pressure as supply returns from mines such as Moranbah and Centurian.
Thermal coal may hold up seasonally but could weaken if Chinese domestic supply normalises and gas prices fall. Zinc prices are also expected to soften as demand remains weak and supply increases.
UBS forecasts Glencore will deliver EBITDA of about $13.4 billion in 2025, with a much stronger second half driven by higher production and prices.
The broker expects scope for another $1 billion share buyback with the full year results, likely funded by further sales of the Bunge equity stake. Net debt is expected to remain above $10 billion at the end of 2025.
On growth, UBS notes progress is likely to be slow. Key copper projects such as MARA and El Pachon are expected to receive approvals in the first half of 2026, while Coroccohuayco may be approved late in 2026, with first production not until 2028.
Material volume growth is seen in the 2030s.
The conclusion is that neither near-term cash returns nor growth are especially compelling.