Morgans lowers the rating for Fortescue Metals Group to Reduce from Add and decreases the target price to $18.70 from $21.10. It’s considered a mass-scale low-grade pure iron ore producer will be particularly sensitive to a maturing iron ore cycle.
The broker also highlights cost pressures are surging in WA, which could lead to a softer fourth quarter sales/cost performance and potential further Iron Bridge downgrades.
The analyst upgrades short-term iron ore forecasts, while also increasing operating cost assumptions and reducing the company’s multiple closer to its peak cycle level.
Sector: Materials.
Target price is $18.70.Current Price is $22.97. Difference: ($4.27) – (brackets indicate current price is over target). If FMG meets the Morgans target it will return approximately -23% (excluding dividends, fees and charges – negative figures indicate an expected loss).
