Barclays Maintains an 'Overweight' on Vale S.A. (VALE); Strategy Intact
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Price: $14.23 -3%
Rating Summary:
13 Buy, 13 Hold, 2 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 14 | Down: 16 | New: 12
Rating Summary:
13 Buy, 13 Hold, 2 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 14 | Down: 16 | New: 12
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Barclays maintains an 'Overweight' on Vale S.A. (NYSE: VALE), PT $46.
Barclays analyst says, "Feedback from the Barclays Capital International Franchise Conference hosted in Napa Valley. Investors remain highly concerned about lingering macro risks (Chinese slowdown, European sovereign risks, end of QE2), opex/capex inflation and resource nationalism. The main source of concern, in our view, is the extent of the anticipated demand slowdown ahead, with some pricing in hard-landing scenarios. In contrast, Vale delivered a reassuring message to investors, stating that it is sold out in iron ore and committed to its organic growth pipeline/ returning cash to shareholders."
"We recommend that investors build positions in Vale. We expect: (i) only a modest demand slowdown from China in 2H11; (ii) iron ore prices to remain very high for at least 3 years; (iii) above cost of capital returns in most of its projects; and (iv) capital discipline and strategic focus to remain intact. Vale trades at a 2011 EV/EBITDA of 4.4x (in line with Rio Tinto/28% discount to BHP), and we reiterate our PT of US$46/shr (considering 2015 iron ore volumes of 436Mtpa vs. Vale's new guidance of 469Mtpa)."
For more ratings news on Vale S.A. click here and for the rating history of Vale S.A. click here.
Shares of Vale S.A. closed at $31.33 yesterday.
Barclays analyst says, "Feedback from the Barclays Capital International Franchise Conference hosted in Napa Valley. Investors remain highly concerned about lingering macro risks (Chinese slowdown, European sovereign risks, end of QE2), opex/capex inflation and resource nationalism. The main source of concern, in our view, is the extent of the anticipated demand slowdown ahead, with some pricing in hard-landing scenarios. In contrast, Vale delivered a reassuring message to investors, stating that it is sold out in iron ore and committed to its organic growth pipeline/ returning cash to shareholders."
"We recommend that investors build positions in Vale. We expect: (i) only a modest demand slowdown from China in 2H11; (ii) iron ore prices to remain very high for at least 3 years; (iii) above cost of capital returns in most of its projects; and (iv) capital discipline and strategic focus to remain intact. Vale trades at a 2011 EV/EBITDA of 4.4x (in line with Rio Tinto/28% discount to BHP), and we reiterate our PT of US$46/shr (considering 2015 iron ore volumes of 436Mtpa vs. Vale's new guidance of 469Mtpa)."
For more ratings news on Vale S.A. click here and for the rating history of Vale S.A. click here.
Shares of Vale S.A. closed at $31.33 yesterday.
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