The Facts !, page-120

BBY lowers its target price on Fortescue Metals (FMG) 39% to $3.50, saying that the prospect of an additional 100 million tonnes per annum of iron ore supply from mid-2015 will continue to cap iron ore and equity prices.
At A$2.67 a share, the market is pricing in $70 a ton iron ore, according to BBY.

But with China’s real estate sector rising strongly on the Shanghai Stock Exchange, the chances of a recovery in iron ore prices and sentiment toward the iron ore stocks is higher than the market is accounting for, BBY analyst Mike Harrowell says.

He keeps his Buy rating on Fortescue, and says shorting the stock is a “bad idea”, as it’s unlikely to go broke under any iron ore price scenario.

“The Solomon hub can produce CID iron ore at the same cost as BHP and RIO can produce Yandi, and we believe the debt can be serviced from Solomon cash flow alone.”

http://businessnow.theaustralian.com.au/