Zacks Investment Research downgraded shares of Vale S.A. (VALE) from NEUTRAL to UNDERPERFORM on May 24, 2012, with a target price of $17.00.
We downgrade our recommendation on Vale from Neutral to Underperform. We are concerned about the current global instability and a slower-than-expected worldwide growth rate which has been constantly raising concern for miners, including Vale. On the operational side, resource nationalism, political uncertainty and natural disaster continue to impede efficiency. In addition, rising energy prices, currency fluctuations and huge mining taxes may compress margins in the coming quarters. Vale recorded an EPADS of $0.74 in first quarter 2012, drastically down from $1.29 in the year-ago quarter. However, the current demand upside for metals and minerals worldwide looks buoyant. Supply tightness and the resultant increase in spot prices are also anticipated to drive growth in the coming quarters. Moreover, the company's strategy of diversification into coal, copper and fertilizers, while maintaining a competitive position in iron ore and nickel, would complement its organic growth pipeline.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
To get a free copy of the research report on Vale S.A. (VALE),
click here.
For more information about research offerings from Zacks Investment Research, visit
Zacks.com .
Be the first to comment