Glencore Shares (GLEN) Downgraded Despite Price Target – The Latest

Glencore shares (LON:GLEN) have received a mixed call this morning,  following a downgrade from JPMorgan, despite an increase in the firm's price target, highlighting prevailing concerns about the company's copper production outlook and future capital expenditure plans.

The shift in sentiment underscores the growing uncertainties surrounding Glencore's ability to meet its ambitious targets and maintain its historical capital distribution strategy.

The London-listed shares saw a muted response, reflecting the conflicting signals of a lowered rating coupled with a raised price expectation.

JPMorgan reduced its rating on Glencore to ‘Neutral' from ‘Overweight,' while simultaneously increasing the price target to 400p, up from 370p. This seemingly paradoxical move reflects a broader concern within the analyst community regarding the near-term potential of European miners after recent rallies, suggesting that stock selection within the sector is becoming increasingly challenging.

A key factor driving the downgrade is apprehension over Glencore's capacity to achieve its 2025 copper production guidance.

The company faces the daunting task of boosting copper output by approximately 50% in the third and fourth quarters to reach the lower end of its target range of 850-890 kilotonnes. This production hurdle introduces significant event risk ahead of the Q3 report scheduled for October 29.

Reinforcing this concern, JPMorgan has placed Glencore on Negative Catalyst Watch prior to its upcoming Capital Markets Day on December 3, the first since 2023. Markets anticipate potential announcements of higher long-term capital expenditures at this event, which could limit excess capital distributions in the medium to long term.

While Glencore's first-half 2025 EBITDA of $5.4 billion aligned with consensus estimates, its net debt rose to $14.5 billion, exceeding Goldman’s forecast of $13.5 billion and the consensus of $12.4 billion. This pattern of earnings meeting expectations but free cash flow conversion falling short suggests continued pressure on cash generation, with year-end net debt projected to approach $15 billion.

Furthermore, technical indicators suggest the stock may be due for a correction. The Relative Strength Index (RSI) has climbed to 81.5, indicating overbought conditions. An RSI above 70 typically signals that a stock may be overvalued and vulnerable to a price decline. The combination of these factors paints a complex picture for Glencore.

While the increased price target from JPMorgan offers some encouragement, the underlying concerns about production targets, capital expenditure, and free cash flow generation continue to weigh a little on market sentiment.