Fortescue Metals Group Ltd
(ASX:FMG) has been downgraded from “buy” to “neutral” from Citigroup, says the Australian Financial Review.
The AFR reports Citigroup has issued the recommendation, advising that while the group fundamentally likes Fortescue the key upside risk to its valuation is from high long-term iron ore prices.
The move comes following a surge in the iron ore miner’s share value, after the approval of an $8.5 billion expansion in the Pilbara of Western Australia announced last Friday.
According to the paper Fortescue still needs an extra $2 billion to $4 billion in debt to fund the plan, despite already having around $1 billion in cash and strong cash flow.
Fortescue earned a net profit of $681.62 million in the year to 30 June.
