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UPDATE: Bank of America Upgrades Vale SA to Buy on Risk/Reward

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Bank of America upgraded Vale SA (NYSE: VALE) from Neutral to Buy and maintained a $23.00 price objective.

Bank of America said, "We upgrade Vale to BUY from Neutral, as the stock now implies an 18% upside potential to our US$23/ADR price objective, on top of a 4% dividend yield. We think the risk reward balance is turning to Vale's favor and base our upgrade on: 1) capital discipline (= no Rio Colorado), 2) ST impacts from cost cuts, 3) upside bias on iron ore prices (our US$120/t est is 19% below spot), 4) 30% underp. vs Rio Tinto in the last two years, 5) unlocking value through asset sales, 6) delivering growth, 7) main overlooked event of the decade (extension of Valepar's shareholder agreement) could happen in the ST, 8) valuation at 5.9x EV/EBITDA and 8.9x P/E, 12% discount to hist avg, 9) little exposure to Brazil's domestic market, and 10) we think investors are not overweight the sector/stock."

Vale SA closed at $19.47 on Wednesday.

Latest Ratings for VALE

DateFirmActionFromTo
Sep 2014Credit SuisseMaintainsNeutral
Aug 2014JP MorganMaintainsOverweight
Aug 2014NomuraMaintainsBuy

View More Analyst Ratings for VALE
View the Latest Analyst Ratings

Posted-In: Bank of AmericaAnalyst Color Upgrades Analyst Ratings

 

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