Ah yes, it’s a stampede! From Craig James:
CBA analysts recently downgraded iron ore price forecasts for 2014/15 to US$98 per tonne from US$114/t and calendar year 2015 to US$100/t from US$109/t.
Rio Tinto remains CBA’s preferred exposure in the sector on valuation grounds. Rio Tinto is trading at 9.8 times calendar year 2015 earnings, compared to BHP at 14.0 times 2014/15 earnings.
On the new iron ore price forecasts, CBA believes that Fortescue will not pay down enough debt in 2014/15 to bring gearing below 40 per cent. “The combination of high operating and financial leverage leaves FMG exposed
to downside shocks on the iron ore price.”
Source; Macrobusiness
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