Jefferies sees strong near-term headwinds for Fortescue

JIANDE INTERNATIONAL HOLDINGS

16/02/2022 03:33

** Jefferies says Fortescue Metals'  FMG.AX  H1 FY22 EBITDA of
$5 bln was slightly below the brokerage's estimate due to higher
unit costs and lower realized prices
    ** Jefferies reiterates hold rating and price target of A$19
per share for FMG, sees headwinds in the near term strengthening
    ** Sees realized prices to fall further as Brazilian supply
has recovered from weather-related disruptions in Jan causing an
uptick in demand as market shifts to surplus again 
    ** "FMG's dividend was down 41% y/y, and we expect it to
fall further as iron ore prices go lower and the payout ratio of
a smaller earnings number likely declines as well"- Jefferies 
    ** Jefferies says FMG's product quality mix would improve
when its Iron Bridge project comes online, but large discounts
for its lower grade ores are likely to persist 
    ** Two out of 18 analysts rate the stock "buy" or higher,
nine "hold" and seven "sell" or lower; median PT A$16.8–
Refinitiv data
    ** Company's shares down 12.4% this year as of last close


 (Reporting by Roushni Nair in Bengluru)
 ((Roushni.Nair@thomsonreuters.com;))