(Sharecast News) - House broker Liberum upgraded its rating on shares of iron ore company Ferrexpo to 'buy' from 'hold' on Wednesday, hiking the price target to 500p from 180p.
Liberum said high-grade iron ore pellets give the company a structural long-term margin advantage over Australian peers as the market pushes for more environmentally friendly steel.
"Operating free cash flows from better margins are sufficient to deliver 66% volume growth over the next ten years and a sustainable dividend yield of 12.7%, more than compensating for perceived country risks," it said.
"Trading on operating free cash flow yield of 37% with upgrades to consensus of 74% in 2021, we upgrade to buy."
Liberum said the stock is cheap on "essentially any metric one wants to examine".
It said the group is undervalued relative to lower-grade peers like Rio Tinto, which are facing greater structural demand pressures.
"The current discount is partly driven by geographical exposure, which we believe is overdone, particularly given the challenges faced by iron ore producers in other countries."
Ferrexpo (FXPO)26 Jun 2024 20:14
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(Alliance News) - The following is a round-up of updates by London-listed companies, issued on Wednesday and not separately reported by Alliance News: