UBS ups Glencore target but stays 'neutral'

21st Aug 2014 12:11

UBS has upped its target price for mining and commodities trading giant Glencore from 330p to 350p after an "encouraging" roundtable meeting with management.However, while the bank said it is attracted to the business strategy, it said the improving outlook for zinc and nickel markets and positive earnings momentum from the marketing division is already reflected in the share price, which has outperformed the sector by 11% so far this year."We expect near-term multiples to cap performance until the copper/coal price outlook improves," UBS said, as it maintained a 'neutral' rating on the stock.Nevertheless, Glencore, which announced a $1bn share buyback on Wednesday, was the first of the major miners to step up returns and hand back cash to shareholders, UBS pointed out.At the roundtable meeting, the bank highlighted the company's promise to sustain the buyback programme with its balance sheet now solid after the $6.5bn sale of the Las Bambas copper project in Peru.Meanwhile, management said that it is seeking deals through joint ventures, while the outlook for marketing, volume growth and commodity prices looks positive.The stock was more or less flat at 360.55p by 11:18 on Thursday.BC