Xstrata plc (LON:XTA) is a Buy at RBS who have this morning set a target share price on the stock at 1575.

Xstrata shares are currently at 970.

The reason behind the release of the note from RBS entitled "The Leveraged Play" is that Xstrata is looking oversold at current levels:

"Xstrata has the greatest leverage in our mining coverage universe. It is down 25% month to date and 37% year to date vs FTSE350 Mining Index down 20% mtd and 25% ytd. Unlike industrial metals, where prices have collapsed, coal prices remain firm: 27% of 1H earnings were from coal. Xstrata looks oversold."

According to analyst Nick Hatch Xstrata is due a strong second half to 2011:

"2H earnings should show an improvement on 1H as 2Q operational momentum (recovery from flooding in Queensland, for instance) continues to flow through and higher volumes and thus lower unit costs should protect earnings from lower commodity prices.

"The company has 22 major growth projects under development and expects to increase production volumes by 50% by 2014, with resultant unit cost declines. Net debt stands at US$8.1bn and net debt/net debt + equity is 15%."