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Investing.com - Jefferies raised its price target on Vale S.A. (NYSE:VALE) to $15.00 from $14.00 on Monday, while maintaining a Buy rating on the Brazilian mining company’s stock. Vale is currently trading at $12.09, with analyst targets ranging up to $15.50. According to InvestingPro data, the stock appears undervalued based on its Fair Value assessment.
The firm cited Vale’s strong third-quarter results, which exceeded Jefferies’ expectations for both EBITDA and free cash flow. Vale’s EBITDA stands at $14 billion for the last twelve months, with an impressive free cash flow yield of 14%. Vale’s expanded net debt fell 5% during the quarter, continuing to decline at a faster pace than the research firm had anticipated.
Jefferies noted that capital returns from Vale should increase as a result of the improved financial position. The mining company has been delivering unit cost reductions, with both copper and nickel all-in cost guidance revised lower for fiscal year 2025. InvestingPro data shows Vale maintains a substantial 6.04% dividend yield, with a 25-year history of consistent dividend payments.
Vale has demonstrated impressive cost management capabilities across its operations, contributing to the stronger-than-expected financial performance that prompted the price target increase.
Jefferies identified Vale as its top pick among major iron ore miners and one of its top picks in the mining sector overall.
In other recent news, Vale S.A. has been upgraded by Fitch Ratings, with its Long-Term Foreign and Local Currency Issuer Default Ratings moving from ’BBB’ to ’BBB+’ and a Stable outlook. This upgrade is attributed to Vale’s diversification into higher value-added products and its efforts in environmental risk mitigation. Additionally, Scotiabank has upgraded Vale’s stock to Sector Outperform, highlighting the company’s pricing strategy after visiting its Brucutu and Capanema mines. Meanwhile, RBC Capital has maintained its Sector Perform rating on Vale, with a consistent price target of $11, following a site visit that emphasized infrastructure improvements.
In legal developments, Vale, along with BHP Group, has offered a $1.4 billion settlement to address a class action lawsuit in the UK concerning the 2015 Mariana dam disaster in Brazil. The proposed settlement includes $800 million for victim compensation and $600 million for legal expenses. These recent developments reflect Vale’s ongoing strategic and operational adjustments.
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