The word on Wall Street
The majority of the analysts covering Vale SA (VALE) have a “hold” recommendation on the stock. According to the consensus compiled by Thomson Reuters, 48% of the analysts recommend a “hold” for Vale stock compared to 43% recommending a “buy.” The stock’s target price is $10.57, which implies downward potential of 7.1%.
Vale’s target price has risen 85% in the last one-year period, mostly due to company-specific factors like debt, cost reduction, and the start of its S11D project. Vale’s peers (XME) Rio Tinto (RIO) (TRQ) and BHP Billiton (BHP) have not seen such growth in their target prices.
Vale stock has not seen any major upgrades or downgrades since May 2017. Its last upgrade came on May 31, 2017, from HSBC Holdings, which upgraded the stock from “hold” to “buy.”
HSBC analyst Jonathan Brandt upgraded Vale stock to a “buy” and raised its target price from $10.00 to $10.50. The analyst believes the decline in iron ore prices has mitigated some risk and that the focus should shift to its free cash flow generation.
On August 8, 2017, BMO Capital Markets reiterated its “hold” rating on the stock with a target price of $8. BMO had upgraded Vale to “market perform” from “underperform” in March while increasing its target price from $7 to $10. The upgrade was mainly due to the company’s higher commodity price expectations.