The word on Wall Street
According to Reuters, 55% of Wall Street analysts recommend a “hold” on Vale (VALE), while 36% of the analysts rate it as a “buy.” Vale’s target price is $10.3, which implies an upward potential of 29.6%.
In the past year, Vale’s target price has risen 100%, mostly due to company-specific factors like debt, cost reduction, and the start of its S11D project. The target prices for mining peers Rio Tinto (RIO) and BHP Billiton (BHP) haven’t seen such growth.
Vale’s stock has seen several upgrades in the past few months. Brokers such as HSBC, Credit Suisse (CS), J.P. Morgan (JPM), Morgan Stanley, and Alliance Bernstein have all upgraded the stock.
The most recent upgrade came from HSBC Securities on May 31, 2017. The firm upgraded the stock from “hold” to “buy” and slightly increased the target price from $8.67 to $8.76.
BMO Capital Markets upgraded the stock to “market perform” from “underperform” on March 31, 2017. The firm also increased its target price to $10 from $7 mainly due to a more optimistic outlook for iron ore prices from BMO. In a more recent report published on May 5, 2017, its analysts stated that they expect a 22% appreciation in Vale’s stock.
Alliance Bernstein and Citigroup
On January 25, 2017, Alliance Bernstein upgraded Vale from “market perform” to “outperform.” It has a target price of $14.20 for the stock.
Citigroup (C) also upgraded Vale from a “sell” to a “neutral” rating on November 1, 2016. It also raised Vale’s target price from $4.40 to $7.30. The firm expects Vale to benefit from higher Chinese steel prices (SLX).