The Fortescue Metals Group Limited (ASX: FMG) share price had a subdued start to the week.
The mining giantâs shares have just closed the day a touch under 1% lower at $18.21.
Thatâs despite rivals BHP Group Ltd (ASX: BHP) and Rio Tinto Limited (ASX: RIO) both rising over 1%.
Why did the Fortescue share price underperform?
Todayâs weakness in the Fortescue share price appears to have been driven by a lukewarm response to the companyâs latest quarterly update.
For example, the team at Morgans responded by maintaining its hold rating and cutting the price target on the companyâs shares to $17.40.
Based on the current Fortescue share price, this implies potential downside of 4.5% for investors over the next 12 months.
Morgans commented:
Despite recent share price weakness, we believe FMG is still trading around fair value and will look for further volatility before considering our investment view. We do see potential for the current volatility to push FMG into oversold territory.
What else?
Analysts at Goldman Sachs are far more bearish. In response to Fortescueâs update, the broker retained its sell rating and cut its price target to $12.70.
Based on the current Fortescue share price, this suggests significantly more downside risk of 30% over the next 12 months.
Goldman believes its shares are extremely overvalued when compared to BHP and Rio Tinto. It explained:
The stock is trading at a significant premium to BHP & RIO; c. 1.5x NAV vs. RIO & BHP at c. 0.8x & 1x NAV, c. 5.5x EBITDA (vs. BHP on 5x & RIO on c. 3.5x), and c. 5% FCF vs. BHP & RIO on c. 8-12%.
In addition. the broker has concerns over âwidening of low grade 58% Fe product realisationsâ and âuncertainties around Fortescue Future Industries (FFI) diversification and Pilbara decarbonisation.â
The post What brokers are saying about the Fortescue share price in August appeared first on The Motley Fool Australia.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now
See The 5 Stocks
*Returns as of July 7 2022
(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}
setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()
More reading
- Guess which 2 ASX 200 shares have some of the highest dividend yields right now
- Fortescue share price slumps as iron ore price pulls back
- Why BrainChip, Fortescue, PointsBet, and Zip shares are dropping
- 5 things to watch on the ASX 200 on Friday
- Fortescue share price lifts on record iron ore exports
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 Scott Phillips.
from The Motley Fool Australia https://ift.tt/LBOy5M8
Stock Pick 