Iron ore price, page-36486

I know correspondents here don't rate analysts, but its worth looking at their reasoning and then pinpointing where you differ.
Goldman Sachs have downgraded FMG to SELL today. This is why:

"We rate FMG a Sell on:

1. Relative valuation: The stock is trading at c. 1.7x NAV vs. RIO at c. 0.85x NAV.

2. Widening of low grade 58% Fe product realisations: we see spot realisations for FMG's 58% product currently at c. 75% of the 62% Index (vs. 84% in the June Q) with likely further headwinds as China cuts steel production in 2H.

3. Execution and ramp-up risks on the Iron Bridge project: capex has increased to US$3.3-3.5bn (100% basis), c. +US1bn higher since the initial cost when it was approved in April 2019, with a 6-month delay and a slower expected ramp up. We model capex of US$3.7bn and first ore in Q1 2023 (FMG: by Dec 2022), and an 18-24 month ramp up.

4. Uncertainties around Fortescue Future Industries (FFI) diversification: FMG is targeting a 10% allocation of NPAT to Fortescue Future Industries (FFI) renewable energy projects (green hydrogen, solar, wind, etc) but only when a project is investment ready. Other possible renewable projects FMG has spoken about are further solar investments and also wind investments in the Pilbara to decarbonize the mining fleet, and other green hydrogen projects with a focus on offshore water hydro resources."

   
   Interestingly, GS reckon FMG will make just as much money in FY22 as in FY21 just gone. It's after that the negativity comes in.
   Their 12 month TP for FMG is $19.90.
   
   My opinion: FMG are yielding 11.6% v RIO 8.0%.
   The near term outlook is terrific at current IO prices. 58% ore is in favour right now. This changes with the wind.
   Iron Bridge gives FMG an improved product mix to suit different winds.
   FFI....I reserve my judgement but every company has to have a plan for change.
   I am in at $20 and hope for a further 12% dividend on top of recent $2.11 (10.5%) in the coming 12 months, with some of that already banked.
   Beyond FY22 is just too hard to predict. This part is guesswork.