Broker snap: JPMorgan upbeat on Glencore, downgrades Antofagasta

15th Aug 2013 09:20

JPMorgan Cazenove has named diversified miner Glencore Xstrata its top pick amongst copper producers, while downgrading its rating for Antofagasta.The broker has a bullish outlook for copper, its preferred commodity currently, "with stable through-the-cycle demand, challenging supply-side dynamics and rising capex/opex supportive of prices at or above current levels over the next decade, in contrast to other key drivers of sector earnings".Glencore Xstrata, which derives 35-40% of its EBITDA/NPV from copper, "stands out in our view", JPMorgan said, reiterating its 'overweight' rating and 410p target price."Along with strong volume growth, which is on schedule and budget, that will see the company grow to match Codelco as the world's largest producer by 2016, stock-specifics such as updated synergy guidance and a differentiated capital allocation strategy provide catalysts for outperformance in the near/medium-term."As for Antofagasta, the broker said that the stock is "up to speed with events" as it cut its rating from 'overweight' to 'neutral' and trimmed its target price from 1,040p to 1,005p."It does, however, remain the bellwether copper stock in the UK market and will be an attractive option for many investors in a strong copper price environment, despite its premium valuation for its combination of high-quality operations, solid balance sheet and track record of sensible capital allocation."Antofagasta was trading 2.47% lower at 947p by 10:21 on Thursday, while Glencore Xstrata was down a lesser 0.81% at 305.69pBC