Following mixed 3Q results for Fortescue Metals, Morgans points out strong shipments lifted revenue in the face of rising input costs. Management downgraded cost guidance largely due to energy, labor and services, with FY23 expected to be worse.
Iron Bridge, the companies key development project, experienced a further blowout in schedule and budget, notes the analyst. Also, in a well-supplied low-grade market, the company’s product is considered to be struggling.
The broker lowers its target price to $17.90 from $19.10. Hold.
Sector: Materials.
Target price is $17.90.Current Price is $21.73. Difference: ($3.83) – (brackets indicate current price is over target). If FMG meets the Morgans target it will return approximately -21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
