Vale should enjoy boost from higher nickel prices, J.P. Morgan says

The commodities team at J.P. Morgan raises its 2014 and 2015 forecast for nickel, which it says will provide a much-needed boost for Vale (VALE -1.6%); ~90% of Vale’s EBITDA comes from iron ore, but the extent of the firm's change in its nickel price forecast is significant enough to lift Vale's 2014 and 2015 EBITDA by a respective 4% and 10%.

The firm revises its 2014 and 2015 price forecasts by 22% and 52% to $18,540/ton and $24K/ton, respectively.

The spike in nickel prices also will add $600M and $1.7B to 2014 and 2015 free cash flow estimates, JPM says, taking FCF yields to 10.3% and 9.4%, respectively, and ensuring 2014 FCF is enough to meet the 2014 minimum dividend of $4.2B without raising leverage (also).

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Comments (2)
  • Brian Sanders
    , contributor
    Comments (1468) | Send Message
    How much more are they going to re-iterate their "buy" thesis?
    28 Apr 2014, 06:47 PM Reply Like
  • alrightalready
    , contributor
    Comments (84) | Send Message
    As many times as it takes to unload this dog. People prefer RIO's 4% payout over Vale's 6% payout. The 4% must "spend better" than Vale's 6%!


    Disclosure: I am long Vale.
    29 Apr 2014, 11:52 PM Reply Like
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