Glencore stands out for Credit Suisse analysts

Glencore stands out in a UK mining sector that is cheaper than the wider market and mid-cap sector peers, Credit Suisse analysts said.

The analysts increased their price targets for Glencore, Anglo American and KAZ Minerals as they predicted a "mid-cycle re-rate" for mining shares, potentially in the second half of 2018.

The sweet spot is past for mining stocks after they recovered from the commodities rout of 2015. The shares will "trough higher" as dips occur at higher levels because investors are gaining confidence, the analysts said.

The analyts' star pick is Glencore, maintained at 'outperform' with a target price increased to £4.90 from £4.70. The miner and commodities trader agreed on 20 March to buy Rio Tinto's interest in the Hail Creek coal mine in Australia for $1.7bn (£1.2bn).

"After rebuilding its balance sheet, Glencore has not lost its sense of opportunism and remains a growth-driven company cementing five bolt-on acquisitions and two divestments last year, in an increasingly capital efficient manner," they wrote.

The analysts increased their target price for Anglo American to £17.20 from £15.80 and for KAZ Minerals to £10.50 from £9.50 and kept an ‘outperform’ rating on both stocks.

Their other top pick is Norsk Hydro, which was told in February to halve output at its Brazilian aluminium plant due to pollution fears. The analysts advised investors to look beyond short-term problems for the Norwegian company to focus on its potential. They reduced the target price to 65 krone from 68 krone on 23 March with an ‘outperform’ rating on the shares.