Insights

Champion Iron (ASX:CIA) share price up 7% but could still go 28% higher

This iron ore miner’s shares are having a good day…
The post Champion Iron (ASX:CIA) share price up 7% but could still go 28% higher appeared first on The Motley Fool Australia. –

The Champion Iron Ltd (ASX: CIA) share price has been a strong performer on Wednesday.

In afternoon trade, the iron ore producer’s shares are up 7% to $5.00.

Why is the Champion Iron share price rising?

There have been a couple of catalysts for the rise in the Champion Iron share price today.

One has been news that embattled Chinese property giant Evergrande will live to fight another day after revealing that it will make a bond repayment tomorrow.

This has given the whole market, but particularly iron ore miners, a big boost.

For example, the BHP Group Ltd (ASX: BHP) share price is up 3% and the Fortescue Metals Group Limited (ASX: FMG) share price is up 5.5% at the time of writing.

What else is lifting its shares?

Also giving the Champion Iron share price a lift is a broker note out of Citi this morning.

According to the note, the broker has upgraded the company’s shares to a buy rating with a price target of $6.40.

Based on the current Champion Iron share price, this implies potential upside of 28% over the next 12 months before dividends. This increases to ~34% if you include the 29 cents per share dividend Citi is forecasting in FY 2022.

What did the broker say?

Citi made the move on valuation grounds following a sharp pullback in the Champion Iron share price.

It explained: “While we acknowledge significant near-term risk to iron ore price forecasts, CY22/23 iron ore at $125/$80 per tonne provides a much greater level of confidence for earnings forecasts, particularly as China lead indicators stabilise.”

“Further, longer dated market concerns re large-scale iron ore exports from Guinea now look much less certain. Iron ore may hold at +$100 levels for longer than the market expects. We revisit our depreciation assumptions for CIA and expect $/t depreciation to increase from current $4.5/t to $6/t by CIA FY23 (March YE) on the back of Bloom Lake Phase II expansion.”

“We also roll our valuation year to FY24 (at 4.5x multiples) when we expect normalised US$80/t benchmark iron ore pricing plus expanded production. While this reduces our target price to A$6.4/shr, recent share underperformance presents enough upside to upgrade CIA to Buy from Neutral,” the broker concluded.

The post Champion Iron (ASX:CIA) share price up 7% but could still go 28% higher appeared first on The Motley Fool Australia.

Should you invest $1,000 in Champion Iron right now?

Before you consider Champion Iron, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Champion Iron wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

ASX 200 (ASX:XJO) midday update: Evergrande news boosts market, Zip’s Indian investment

Which ASX 300 shares are the biggest winners and losers on Tuesday?

ASX 200 rebounds into positive territory led by energy and materials shares

ASX 200 (ASX:XJO) midday update: APA makes AusNet bid, New Hope results impress

Which ASX 300 shares are leading the way on Monday?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!