Prime Wealth sees upside at Glencore Xstrata after strong results

4th Mar 2014 10:33

Prime Wealth Group has labelled Glencore Xstrata as a 'buy' after the company beat expectations with annual profits on Tuesday.Senior Trader Davfydd Davies has picked the stock out as one of its 'March Cyclical Trading Picks'."The full-year results from the group today fully vindicate our choice, with the mining giant beating analyst expectations for earnings before interest, tax, depreciation and amortisation (EBITDA) by a comfortable margin," he said.Adjusted EBITDA for 2013 totalled $13.07bn, more or less unchanged from 2012 but well ahead of the $12.3bn expected by analysts.Glencore Xstrata said that improved market results, increased production and productivity gains at many of its industrial operations and some merger related synergies all helped to offset the impact of weaker average commodity prices on its industrial activities.It has identified sustainable annual synergies from the merger of $2.4bn, the full benefit of which will be realised in 2014."While debt remains to be paid down, and the sale of the La Bambas mine in Peru has yet to complete, with the merger cost saving synergies now identified, Prime Wealth are staying long of the stock at this point," Davies said."Glencore shares have struggled to clear 350p since last summer, but with support now at the 20-day moving average at 329p, the shares are expected to return to the February intraday peak of 348p. Once this target is achieved, we expect shares to push on to the top of the July price channel as high as 380p."The stock was 2.4% higher at 334.1p by 11:24 on Tuesday.BC