The FTSE 100-listed miner Glencore PLC (GB:GLEN) declined yesterday after analyst Liam Fitzpatrick from Deutsche Bank downgraded the rating for the stock from Buy to Hold and moved to the sidelines. The analyst kept his price target at 540p, implying a growth rate of 28.3%. Glencore shares traded down by 4.5% on Wednesday, making them one of the top losers on the FTSE 100 index.
Glencore is among the leading mining companies in the world, producing a diverse range of metals and minerals like copper, nickel, alumina, iron ore, etc.
Reasons Behind the Downgrade
Deutsche Bank primarily downgraded Glencore stock as it expects reduced production numbers ahead of Glencore’s production report for 2023, slated to be released on February 1, 2024. Fitzpatrick believes that the company’s production numbers were impacted by asset sales, mine closures, and operational challenges during the year.
Additionally, the volatility in the prices of metals continues to pose a threat to the company. The decline in nickel and cobalt prices adds further burden to the already falling coal prices, highlighting the ongoing pricing challenges for the company.
Deutsche Bank further stated that these headwinds could hamper shareholder returns in 2024, which might possibly be limited to the company’s base dividend. The bank is optimistic about the stock in the mid-term but also believes there are better alternatives for investors in the mining space.
Meanwhile, several analysts favour Glencore for its attractive dividend yield of 7.83%. The company’s first-half earnings report for 2023 revealed a notable dividend payment of $1 billion, along with an extra $1.2 billion allocated for share buybacks.
Is Glencore a Good Stock to Buy Now?
According to TipRanks, GLEN stock has a Moderate Buy consensus rating based on a total of 11 recommendations. It includes six Buy and five Hold ratings. The Glencore share price forecast is 521.36p, with a high forecast of 595p and a low forecast of 465p. The price target implies an upside of 24% on the current trading levels.
