On Monday, Deutsche Bank upgraded shares of Glencore (OTC:GLNCY) Plc (GLEN:LN) (OTC: GLCNF) from Hold to Buy. The move comes after the stock experienced a 15% decline year-to-date, and as market expectations have been adjusted lower.
"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 the analyst.
Glencore's stock upgrade reflects Deutsche Bank's positive outlook on the company's future financial performance. The analyst predicts that the EVR deal will significantly contribute to Glencore's free cash flow yield, which is expected to increase from the current estimate of 8-9% in 2024 to 12-13% in 2025. This acquisition is seen as a major factor that could enhance the company's financial metrics.
The bank also suggested that there is an increasing likelihood that the planned separation of CoalCo might be postponed. If this occurs, Glencore could reclaim its position as the leading cash generator in its sector. This scenario could potentially lead to additional cash returns to shareholders in the second half of the year.
The analyst's statement highlighted the potential for Glencore to increase shareholder value, especially with the EVR acquisition being described as "highly accretive." The company's strategic moves are expected to play a crucial role in its financial growth and market position.
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