The Fortescue Metals Group Limited (ASX: FMG) share price has been an incredible performer again this year.
Since the start of the year, the iron ore producer’s shares have recorded a gain of 102%.
This has been driven by its strong operational performance and of course a significant rise in the price of iron ore.
Is it too late to invest?
Given its strong gains this year, investors will no doubt be wondering if they have missed the boat with this one.
In light of this, I thought I would take a look to see what brokers are recommending investors do right now with Fortescue’s shares.
Buy rating.
Analysts at Macquarie currently have an outperform rating and $23.00 price target on the company’s shares.
Macquarie recently upgraded its earnings estimates to reflect the strong iron ore prices. It is also expecting material free cash flow yields to result in generous dividend payments in FY 2021.
The broker has forecast a fully franked $2.61 dividend, which represents a 12% yield.
Neutral rating.
Goldman Sachs has a neutral rating and $20.10 price target on Fortescue’s shares.
While the broker is forecasting a 12.7% dividend yield in FY 2021, it still feels its shares are fully valued at the current level.
It commented: “We believe FMG is fully valued based on a DCF basis discounting long run iron ore of c. US$80/t (real), but we see likely consensus EPS upgrades over the next few quarters and expectations for strong capital returns in February to continue to support share prices in the near term.”
Sell rating.
Analysts at Morgan Stanley have an underweight rating and $14.10 price target on the company’s shares.
Although they were pleased with its performance in the first quarter, they didn’t see enough value in its shares to change their rating.
Though, it is worth noting that the broker hasn’t yet responded to the most recent spike in iron ore prices. So, an update to its recommendation could be coming in the near future.
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More reading
- Citigroup downgrades these ASX mining stocks after a big rally
- ASX mining shares boosted today after broker upgrades
- Why the Fortescue (ASX:FMG) share price hit a record high today
- Iron ore exports unlikely to slow down amid Australia–China trade tension: experts
- 2 excellent ASX dividend shares with 6%+ yields
Motley Fool contributor James Mickleboro 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.
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