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Vale raised to Buy at Morgan Stanley on cheap valuation, asset sales

  • Vale (VALE +2.6%) has underperformed other major miners in the past year and now trades at a 30% discount to Australian competitor Rio Tinto in forward P/E - too cheap, according to Morgan Stanley analysts who upgrade shares to Buy with a $17.50 price target.
  • The firm forecasts Vale’s return on equity improving to 16% in 2014 from 10% in 2013, as efforts to divest non-core assets and cut costs should finally show up on the bottom line as the Brazilian real stabilizes at a weaker level; Vale's cancellation of its Rio Colorado potash project in Argentina due to the country's turbulent economic and political environment reduced the investment budget by ~$3.7B.
  • Last week, J.P. Morgan recommended Vale for its high-quality iron ore.
Comments (3)
  • Bigdog3004
    , contributor
    Comments (32) | Send Message
     
    Having held this stock since May of 2012 with nothing but a loss in share price, I hope this moves the stock up!
    5 Feb, 01:54 PM Reply Like
  • Brian Sanders
    , contributor
    Comments (816) | Send Message
     
    It will overtime, it's cheap just as the analyst says. Be patient.
    5 Feb, 03:16 PM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    Everyone keeps saying Iron Ore going lower but I'd say VALE stock has already priced in the move lower even though it hasn't happened. This makes a good move higher, not hard to believe. Problems in EM and China definitely haven't helped the sentiment side of VALE.
    5 Feb, 04:27 PM Reply Like
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