Fortescue Metals Group has announced it expects to report earnings of US$4.0-4.1b for the first half FY21, marginally below the estimate of US$4.3b forecast by Macquarie.
The broker expects the company will maintain a dividend payout ratio of 80% which should deliver a first half dividend of $1.37.
Macquarie considers earnings upgrade momentum remains strong with the company trading on FY21 and FY22 free cash flow yields of 13% and 18%, respectively, at spot prices.
The Outperform rating is unchanged and the target is reduced to $27 from $27.20.
Target price is $27.00.Current Price is $24.32. Difference: $2.68 – (brackets indicate current price is over target). If FMG meets the Macquarie target it will return approximately 10% (excluding dividends, fees and charges – negative figures indicate an expected loss).