Some market commentary,FMG’s stock, commodity disparity:...

Some market commentary,



FMG’s stock, commodity disparity: Shaw

Shaw and Partners have long had a Buy rating on Fortescue, 29 months to be precise, but this week cut the stock to hold as it predicted further weakness in the iron ore price.

In a note to clients, senior analyst Peter O’Connor says the gap between the company’s trading price and its commodity price is too big.

‘The share price has stayed/moved higher since early August despite the decline in underlying iron ore price. Sure, FMG has delivered a well-received FY19 financial result and 1Q2019 production/sales scorecard but iron ore price volatility/headwinds will likely cap share price,” Mr O’Connor notes.

He adds that the stocks relative value measure does not appear as streched as peers Whitehaven, Alumina or South32 were last year, but that the stock is “certaintly more fully valued than it has been for over a year or so”