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Broker views: Ferrexpo in focus

04 August 2017 15:19

Equity research analysts at HSBC have downgraded their investment rating on iron ore pellet producer Ferrexpo (LON:FXPO) to hold (from buy), believing the shares are now fully valued following the recent rally, which has seen the stock rise 45% in the past two months.

Despite stating that the company delivered a good first half result and ticked all the boxes, it reckons FXPO will be hard-pressed to replicate this result in the second half of the year and in 2018.

HSBC trimmed its price target to 225 pence per share (from 230 pence), implying 6.1% potential downside.

JP Morgan Cazenove also cut its recommendation on the stock to neutral (from overweight) but increased its target to 190 pence (from 180 pence) saying that, while the company produced a solid set of second quarter results, it sees limited potential for a further rerating.

The City heavyweight commented: "We downgrade FXPO to Neutral on full valuation, no clear catalysts in the near term and our belief that iron ore price >$70/t is unsustainable."

Meanwhile, Deutsche Bank maintained its bullish stock call.

"On the back of these results we have lifted our 2017 EBITDA estimates by ~5%, but we leave 2018+ broadly unchanged and retain our BUY rating and GBP 270 Target Price," Deutsche said.

At 3:19pm: (LON:FXPO) Ferrexpo PLC share price was -0.05p at 245.85p

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