Vale (NYSE:VALE) +0.4% in Monday’s trading as Citi upgraded the stock to Buy from Neutral with a $16 price target, up from $14, with iron ore entering the seasonally strong period as Chinese steel mills prepare to restock.
Citi analyst Alexander Hacking also said he sees potential upside in iron ore from the recent move by China to expand its fiscal deficit from 3% to 3.8%, a “meaningful surprise” that should spark accelerated spending on infrastructure in Q4 2023 and next year’s H1.
Vale (VALE) has materially underperformed iron ore and stock peers this year, which Hacking attributed to weak nickel prices, Brazil’s equity funds rebalancing away from commodity names as rates come down, and ongoing noise around reparations and taxes.
Longer term, Hacking said he remains positive based on Vale’s (VALE) strong asset quality and potential to upgrade operating performance.