Fortescue has bounced 50% off its lows but the broker believes an Overweight rating is still justified. De-bottlenecking the production process will lead to "capacity creep" which, along with incremental debt reduction, will provide for re-rating in FY14, the broker suggests. The broker believes the 160mtpa target is achievable.
Target rises to $5.45 from $4.95.
Target price is $5.45 Current Price is $4.59 Difference: $0.86 If FMG meets the JP Morgan target it will return approximately 19% (excluding dividends, fees and charges).
The company's fiscal year ends in June. JP Morgan forecasts a full year FY14 dividend of 9.02 cents and EPS of 99.20 cents. At the last closing share price the estimated dividend yield is 1.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 4.63.
