Barclays says sell Vale, overly exposed to iron ore prices

|About: Vale S.A. (VALE)|By:, SA News Editor

Vale (VALE -1%) is tagged with a Sell rating and $13 price target at Barclays, which cites overexposure to iron ore prices.

92% of Vale’s earnings, or 77% of its net present value, comes from iron ore; a 10% change in the iron ore price would reduce Vale’s NPV by 49% and 2014 earnings by 32%, according to Barclays.

The firm's price profile assumes iron ore $105/ton in 2014 retreating to $90/ton by 2016, resulting in Vale’s earnings falling 51% by 2016 vs. 2013.

Barclays ranks Vale near the bottom of global peers BHP, RIO and Anglo American (AAUKY.PK, AAUKF.PK) on all key metrics including production growth, free cash flow generation, earnings growth, gearing, return on equity and return on invested capital.