While there has been a revival in the share price since the post-lockdown low of around GBP1.12, the valuation is still way off its 2018 peak when it was above GBP4 a share.
The Canadian investment bank believes a consortium could afford to pay GBP2.80 a share (almost GBP1 more than the current price) and still deliver a 10% annual return.
“Even if this is unobtainable, we think risk-reward is now favourable,” RBC said as it upgraded its recommendation to “outperform” with a price target of GBP2.40.
The shares were up 2.7% mid-morning at GBP1.86, giving it a market capitalisation of just over GBP24bn.
Headquartered in Baar, Switzerland, the company as it exists today was formed via the 2015 merger of Glencore and Xstrata.
It specialises in mining and trading zinc and copper, generating revenues of GBP215bn last year.