The commodity price outlook is far more accommodative and Credit Suisse lifts the target to $11.00 from $7.50. Rating is upgraded to Neutral from Underperform.
This reflects not just material changes in estimates for earnings per share but also the strength of Fortescue Metals’ balance sheet and a buoyant outlook for dividends.
Credit Suisse expects China’s steel demand will remain firm in the first half but decline from the second half as property construction may ease.
However, given the strong rhetoric around infrastructure a 1.6% increase in Chinese steel demand is assumed for 2020, well above previous forecasts.
Target price is $11.00.Current Price is $12.19. Difference: ($1.19) – (brackets indicate current price is over target). If FMG meets the Credit Suisse target it will return approximately -11% (excluding dividends, fees and charges – negative figures indicate an expected loss).