On Thursday, Bernstein SocGen Group adjusted its price target for Glencore Plc (OTC:GLNCY) (GLEN:LN) shares, reducing it to £4.80 from a previous target of £5.70, while still maintaining an Outperform rating on the stock.
The adjustment comes as the firm revises its thermal coal market outlook, acknowledging a shift from the previously high demand for thermal coal due to tight LNG and gas supplies in Europe. The analyst, Bob Brackett, noted that the era of thermal coal as the marginal electron has passed, and with the anticipation of multiple large LNG project start-ups from 2025 to 2028, the market dynamics are expected to change.
Brackett’s commentary highlighted that Glencore (LON:GLEN) is the only company within Bernstein’s coverage with significant exposure to thermal coal. The new price target reflects a revised thermal coal model, which, while still solid, does not project the previously expected high buoyancy. Despite the price target cut, the potential upside of over 33% and Glencore’s reasonable valuation underpin the Outperform rating.
Furthermore, the analysis discussed the stand-alone value of thermal coal for Glencore and addressed the current market multiple, which is seen as unfairly depressed. Brackett also contemplated potential strategies for re-rating the company’s stock value. The revised price target and maintained rating suggest that, despite the changes in the thermal coal outlook, Glencore’s stock still holds a positive upside potential according to Bernstein SocGen Group’s assessment.
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