Fortescue shares: Buy, hold, or sell? Bell Potter gives its verdict

Fortescue Ltd (ASX: FMG) shares have been strong performers over the past 12 months.

Since this time last year, the iron ore giant’s shares have risen approximately 25%.

Where next? Let’s see what analysts at Bell Potter are saying about the miner.

What is the broker saying?

Bell Potter was pleased with the company’s performance during the third quarter. It highlights that Fortescue delivered shipments ahead of expectations and costs that were lower than expected. It said:

FMG has reported total iron ore shipments of 48.4Mt for the March 2026 quarter at C1 cash costs of US$18.29/wmt (vs BPe 48.0Mt at C1 US$19.13/wmt). Shipments were down 4% QoQ following a strong December quarter but contributed to record total shipments of 148.7Mt for the 9 months to end March (in line with guidance and BPe). C1 costs were down 4% QoQ, tracking to the top half of FY26 guidance (US$17.50– US$18.50/wmt). Iron Bridge shipments of 2.0Mt were impacted by weather disruptions, resulting in its FY26 guidance being downgraded from 10-12Mt to 9-10Mt. Total shipment guidance of 195–205Mt remains unchanged.

However, while this was positive, Bell Potter has concerns over capital allocation relating to its green energy plans. It said:

FMG has approved a US$680m investment to develop the Pilbara Green Energy Project, a 200MW capacity, firmed green energy (solar and wind) grid in the Pilbara. FMG has cited potential demand from industrial users and data centres underpinning the commercial case for the project. However, in our view, it presents as a high risk, asymmetrical outcome opportunity that tests the limits of prudent capital allocation.

A remote, hot, cyclone-prone region with limited existing digital infrastructure, fibre connectivity, water for cooling, skilled labour and high logistics costs does not appear a competitive setting for a data centre. These are demanding applications, requiring +99.9% power supply uptime plus extremely tight frequency and voltage regulation. We see a high risk of future writedowns, as with past FMG energy projects.

Should you buy Fortescue shares?

According to the note, the broker has downgraded Fortescue shares to a sell rating with a reduced price target of $18.15 (from $20.30).

Based on the current share price of $20.22, this implies potential downside of 10% over the next 12 months.

Commenting on its downgrade, the broker said:

EPS changes in this report are: FY26: -3%; FY27: -9% and FY28: -5%. FMG’s core iron ore operations continue to perform very well and benefit from an elevated iron ore price. However, we anticipate higher costs to emerge in 2HCY26 as low-cost inventories are exhausted, putting pressure on earnings. We are wary of the “portfolio optimisation” review encompassing Iron Bridge. We drop our rating to Sell.

The post Fortescue shares: Buy, hold, or sell? Bell Potter gives its verdict appeared first on The Motley Fool Australia.

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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.