Brokerage firm XP Investimentos has downgraded its outlook for the shares of Brazilian mining company Vale to neutral, with a price target of BRL 73 (BRL 15) for end-2023.
XP’s downgrade of the mining giant’s stock follows two similar moves from analysts last week. Exane BNP Paribas downgraded Vale’s stock rating from “outperform” to “neutral”, while Canada’s Scotiabank downgraded it from “sector outperform” to “sector perform,” indicating expectations of a weaker performance of Vale stock.
In their report, XP analysts noted that while they foresee promising long-term initiatives for Vale, “a perspective of a trend of decline for iron ore prices, supported by less demand for steel production in China, makes us more cautious about shares’ potential for rising.”
“Iron ore prices will likely settle at a lower level,” the report notes, citing structural efforts from China to push its economy towards consumption rather than capital-intensive sectors.
Nevertheless, XP cites several positive points for the metal industry, including “promising initiatives” in the iron ore division — with higher grades/premiums counterbalancing lower prices — and untapped potential in the basic metals division, with expectations for a higher valuation of that segment.
As of 11 am this Wednesday, Vale shares were trading at BRL 65.10 on the São Paulo stock exchange (B3), down 1.21 percent on the previous day. Since the beginning of the year, Vale stock has lost over 26 percent of its value.
Search
