Here’s what big brokers are thinking after the Fortescue Metals Group Ltd (ASX: FMG) share price hit a record all-time high on Thursday.
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The Fortescue Metals Group Limited (ASX: FMG) share price hit a record all-time high of $22.64 on Thursday. This was on the back of the iron ore spot price going from strength to strength in recent days to hit a 7-year high of US$146 per tonne. Here’s what big brokers are thinking about the Fortescue share price after its market leading performance.
Investor and media day presentation
A fresh round of broker and share price rating updates have come after Fortescue’s investor and media day presentation held on Wednesday. The company provided the market with FY21 guidance which included:
- 175-180 million tonnes of iron ore shipments.
- Costs of US$13.00 – US$13.50 per wet metric tonnes (wmt) on an assumed exchange rate of AUD/USD 70 cents.
- US$3.0 – US$3.4 billion in capital expenditure.
This compares to its FY20 performance of:
- 178.2 million wmt of iron ore shipments.
- Cost of US$12.94 per wmt.
- Realised price of US$78.62 per dry metric tonne (dmt).
- Total capital expenditure of US$2.0 billion.
Iron ore prices were below US$100 per tonne for most of FY20 after hitting a near-term peak of US$120. In FY21, iron ore prices had already passed the US$100 mark by June and US$120 mark by August. Conversely, the Australian dollar/US dollar has hit a 2-year high of 74.6 cents. A higher Australian dollar does have a negative impact on companies that generate earnings from foreign currency.
What brokers think of the Fortescue share price
Brokers across the board did not change their ratings or Fortescue share price targets after reviewing the company’s investor day presentation.
Citigroup retained its neutral rating with a $21.00 price target. Similarly, Credit Suisse had a neutral rating with $16.50 price target.
Macquarie Group Ltd (ASX: MQG) also kept its neutral rating with a $23.00 price target but notes that earnings momentum remains strong.
UBS Group also had a neutral rating with a $19.00 price target. The broker is weary of the strong Australian dollar and is watching for the possible adverse impact it might have on earnings.
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Returns As of 6th October 2020
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.