Iron ore price, page-34214

It should come as little surprise to anyone who actually reads analysts research and the assumptions used that an upgrade was required by Goldman's Iron Ore price targets

With there been no change the long term IO price estimates, FMG's valuation is little changed despite the upgrade.

,Other comments from this mornings research are:

• Our commodities team now expects the iron ore market to return to surplus in 2023 only and have upgraded 2H21 Fe to US$195/t (US$117/t
  previously), and 2022 to US$160/t (US$95/t previously), and highlight ongoing steel mill preference for mid-high grade over low grade.
• We maintain our Buy on BHP (our preferred pick of the majors based on production growth and commodity exposure), upgraded
  RIO to Buy with their recent 2Q production report, and upgrade the other high grade Fe miners (DRR, and CIA) to Buy. We maintain our Sell rating on FMG on relative valuation and TSR vs. our coverage, our negative view on low grade Fe, and capex and execution risk. We view the upcoming August results season as a positive catalyst for the sector, particularly for the major diversified miners based on strong capital returns.
• We revise our FY22-FY23 EPS by +111%/+124% after incorporating our higher Fe forecasts (see Exhibit 1). Our NAV decreases 10% to A$12.7/sh on higher long term seaborne freight and rolling our NAV to June-22. Our TP is up 13% to A$20.5/sh (from A$18.2/sh), our EV/EBITDA target multiple is also lowered to 4x from 4.5x to reflect peak Fe.