Has the Fortescue share price topped out?

The Fortescue Metals Group Limited (ASX: FMG) share price has been on an incredible run since the end of October 2022, rising by around 50%. But, will the iron ore ASX share be able to keep it going?

Last week the company hit a 52-week high. This came after the miner announced a record quarter, delivering its best-ever half-year operating performance.

Iron ore shipments were 49.4 million tonnes in the second quarter of FY23, with 96.9mt of iron ore shipments in the first half of FY23. This was 4% higher than the first half of FY22.

It experienced average revenue of US$87 per dry metric tonne (dmt), compared to C1 costs of US$17.17 per wet metric tonne (wmt).

Can the Fortescue share price keep rising?

Some analysts don’t think so. The Australian reported on a recent broker change on the business, Credit Suisse reduced its rating to underperform with a price target of $17.20. That suggests the Fortescue share price could fall by more than 20% over the next year.

One of the main things that Fortescue is working on is its green energy plans to produce large quantities of green hydrogen, as well as becoming a leader of high-performance batteries through its WAE division.

However, It was reported by the Australian Financial Review that Plug Power is no longer going to be the 50% partner in the Gladstone project where Fortescue Future Industries (FFI) wants to make electrolysers. This means FFI will have to make the factory alone, and use technology FFI has invented.

Electrolysers are used to split water into oxygen and hydrogen.

Management unfazed

But, Fortescue is still very confident about the future.

The AFR reported that the boss of FFI, Mark Hutchinson, said that Plug’s withdrawal would not affect the delivery schedule, with the first electrolysers planned for this year. The newspaper quoted Hutchinson, who said:

The feeling really was that we were advanced on our own technology and the IP [intellectual property] was ours and we can do it at scale.

We want to control our own destiny. Our demand is going to be huge, we think there is enormous value in owning the technology and it is going to develop very, very quickly.

I believe we can get the best economics out of our electrolyser facility, Andy [Marsh] has a different view, that is fine, so bring it on.

We have learnt a lot since the discussions with Plug Power, we love Andy [Marsh], we have a relationship ongoing with Plug Power, they will still supply us with electrolysers on some of our projects.

We are going to need all the OEMs [original equipment manufacturers] to chip in at some stage.

The exciting thing is it’s going to be Australian technology.

Fortescue share price snapshot

After the strength of the share price movement, the Fortescue market capitalisation has reached almost $70 billion.

The post Has the Fortescue share price topped out? appeared first on The Motley Fool Australia.

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More reading

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• 5 things to watch on the ASX 200 on Friday
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• ASX passive income: My game plan to reach $30,000 per year
• Why a merger between Fortescue and this major-league miner could make sense: expert

Motley Fool contributor Tristan Harrison has positions in Fortescue Metals Group. 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.

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