Vale upgraded to Buy from Neutral at Citi

Citi analyst Alexander Hacking upgraded Vale to Buy from Neutral on Friday with a price target of $16, up from $14. Iron ore is entering the seasonally strong period, driven by China steel mill stocking – and this could be exacerbated in 2023-2024 by China’s recent move to expand its fiscal budget, the firm says. On nickel, Citi’s global commodity team just reversed their bearish call. Vale’s stock has underperformed both peers and iron ore year-to-date, leaving plenty of room for a rebound. Free cash flow yield is 8% on Citi’s $100/ton IO price deck and closer to 20% on spot. Citi acknowledges the uncertainty around legacy reparation payments but does not expect any near-term resolution.