Should investors dig Fortescue stock price in July?


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The Fortescue Metals Group Limited (ASX: FMG) the stock price fell double digits in June. Including Friday’s fall, the past month is down 17%.

As an iron ore miner, Fortescue is exposed to movements in the price of iron as well as sentiment regarding commodities and miners.

Resource companies are price takers. This means that miners must take the price at which buyers are buying. The price of iron ore has seen great volatility over the past year or so.

There have been periods of high demand from China. There was also a period last year when Chinese steel production demand fell (perhaps to reduce emissions ahead of the Winter Olympics).

Looking at where Fortescue shares were a year ago, the Fortescue stock price fell almost 30%.

After a difficult period in recent history, could the ASX mining stock perform a turnaround from July?

Broker Thoughts on Fortescue Stock Price

Brokers don’t have a working crystal ball, but they like to estimate price targets – that’s where they think Fortescue’s stock price will be 12 months from the date of the notice on the target price.

Different brokers have various optimistic or pessimistic thoughts about where Fortescue is headed in the next year.

Broker Macquarie currently has a neutral rating on the big iron ore miner. Its price target is $18. After the recent drop in the ASX mining stock, this implies a possible upside of around 5%. Iron ore prices remain higher for longer, while there is also currently a reduced discount for iron ore from Fortescue, which is of lower quality than iron from some of its main competitors.

Broker Morgan Stanley currently has an underweight rating on the miner. Its price target is $14.20, implying a possible decline of around 17%. The Chinese lockdowns led the broker to lower its expectations for commodity prices. The amount of money Fortescue spends on its green initiatives through Fortescue Future Industries (FFI) is also a concern for the broker.

Broker Ord Minnett has a holding rating on the company. The Fortescue stock price target here is $19, implying an upside of around 11%. Ord Minnett thinks Fortescue is the best producer of iron ore.

Dividend expectations

Of the three brokers I mentioned, I will describe two of Fortescue’s FY23 dividend yield projections.

Ord Minnett estimated that Fortescue could pay a 15% premium dividend yield. Macquarie has forecast a premium dividend yield of 17.9%.

Next steps for Fortescue

Fortescue is expected to release its quarterly production report for the three months to June 2022.

Next comes reporting season for the year to June 30, 2022, where we’ll learn Fortescue’s net profit after tax (NPAT) for fiscal 22, final dividend and commentary for the year ahead (and beyond).


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