Shares of ASX-listed Fortescue Ltd. (AU:FMG) rose over 2% today following a favorable production update for the December quarter. Fortescue operates through its subsidiary, Fortescue Metals Group, which develops iron ore deposits. With its main operations in West Australia, the company is considered one of the largest iron ore miners globally.
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Fortescue’s Q2 Performance
Fortescue’s Q2 FY24 iron ore shipments rose 6% quarter-over-quarter to 48.7 million tonnes (Mt) but were lower compared to the same period last year. Fortescue’s solid Q2 shipments helped it achieve the second-highest first-half shipments in its history.
Meanwhile, the miner cut the annual production outlook for its new Iron Bridge operations to the range of 2 Mt to 4 Mt compared to the earlier forecast of 5 Mt due to the discovery of additional leaks in the Canning Basin Raw Water Pipeline.
Even so, FMG said that this downward revision will not have a material impact on its Fiscal 2024 group production target. The company is working to replace the part of the pipeline that is damaged and is expected to incur AU$100 million for the repair work. For the full year FY24, Fortescue has a group annual production target of 192 Mt to 197 Mt.
Meanwhile, Fortescue is steadily progressing toward its goal of becoming the top integrated green technology, energy, and metals company. In Q2 FY24, FMG launched the first of its kind electric excavator in Pilbara and announced the construction of a Green Iron Trial Commercial Plant at its Christmas Creek mine site. The site will produce green iron using the green hydrogen already being produced in the plant.
Is Fortescue a Good Buy?
Recently, Bell Porter analyst David Coates reiterated a Sell rating on FMG stock with a price target of AU$21.39 (26.1% downside).
Overall, FMG stock has a Moderate Sell consensus rating on TipRanks backed by one Buy versus seven Sell ratings. The Fortescue Ltd share price target of AU$21.33 implies 26.3% downside potential from current levels.
