Iron ore producer FMG has corrected over recent weeks in tandem with the pullback by the underlying bulk commodity, i.e. FMG has retreated -8.8% while iron ore has slipped -13% over the same period. We maintain our view that the Chinese economy is “looking for a pivot”, which should create a tailwind for both iron ore and FMG. While we’ve missed the recent run-up in share price, next week’s result will be interesting, particularly any further insight about management turnover, the path forward for Fortescue Future Industries, and how they’re managing cost pressures.
- We like the risk/reward in FMG around the $26 area, or 6-8% lower, though this may change next Thursday when they report.
MM likes FMG in the $25.50-$26 area
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