UBS gave a lift to blue-chip miner and commodities trader Glencore PLC (LON:GLEN) on Wednesday, upgrading its rating to ‘buy’ from ‘neutral’ as the Swiss bank expects 2020 to be “a pivotal year” for the group.
In a note to clients, UBS also raised its target price for Glencore to 270p from 250p, with the trading 0.6% higher at 238.50p.
The Swiss bank’s analysts noted that the blue-chip stock is down 34% since last July’s announcement that the US Department of Justice had issued it with a subpoena for documents and records on compliance with the US Foreign Corrupt Practices Act and money laundering statutes, underperforming the UK diversified miners by around 50%.
They said: “We see upside to GLEN's basket price with base metals to benefit from easing trade tensions and thermal coal to tighten with demand stable/supply contracting; the contract coal price in China and Oct annual price in Japan are encouraging.”
The analysts added that they expect 2020 to be a pivotal year with senior management due to retire and it's African Copper business to improve.
They concluded: “We expect GLEN to keep its dividend flat y/y in 2020 (~6% yield) & to step up returns in 2021 after lowering net debt by $2-3bn.”