Fortescue Metals Group (FMG)
Analyst: Paul Hissey, RBC Capital Markets
Recommendation: Underperform (previously sector perform)
Price target: A$4.25 (previously $5)
Thursday’s close: $5.14
Reason: Growing risk on realisation recovery
Comments: FMG has done an impressive job in reducing its cost base which has allowed the company to reduce debt and strengthen the balance sheet. Despite a solid operational track record, we are increasingly wary of the impact of price realisation on group cashflow and earnings. We view the balance of risk as weighted to the downside and downgrade our investment rating to underperform. FM...