Citi, CLSA say “sell” Fortescue

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From Citi to FMG:

Downgrade to Sell — Interim result was slightly ahead of consensus/Citi at EBITDA level, but NPAT was 16% below our estimate due to higher D&A & interest cost, partially offset by lower tax. An increase in D&A has downgraded our earnings estimate and we reduce our target price to A$2.20/share, previously A$2.40. With iron ore prices expected to fall to US$56/t in 2Q15, before bottoming at US$53/t in 3Q15, we downgrade our recommendation to Sell, previously Neutral.

Iron ore bottoming in Q315? With Anglo, Sino, Roy Hill, RIO, BHP and Vale all still ramping up and China slowing?

I think not!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.