Bradesco BBI sees the CEO's announcement and the revision of guidance for 2025 as triggers for VALE3 shares in the short term (Image: Reuters/Washington Alves)
Even with the weakness of iron ore and the economic slowdown in China, Bradesco BBI maintains an optimistic view for Vale (ELECTION 3).
The bank updated the target price from R$78 to R$77 at the end of 2025 – which represents a potential appreciation of 32.3% in relation to the closing price last Tuesday (17).
The revision follows a reduction in estimates for earnings before interest, taxes, amortization and depreciation (EBITDA) to US$17.9 billion in 2025, due to lower iron ore and nickel prices.
The buy recommendation for the shares was maintained.
What does Bradesco BBI see in Vale?
Despite the revision of the target price, the company, which is the largest exporter of the commodity to the Asian giant, has improved its fundamentals in recent weeks, in the view of analysts.
One of the factors for this was the appointment of the mining company's president earlier than expected.
At the end of August, Vale announced the selection of the current executive vice president of Finance and Investor Relations, Gustavo Pimenta, for the leadership position starting in January 2025.
Pimenta will replace Eduardo Bartolomeo – who ends his term as CEO in December of this year.
Previously, Vale expected to approve a list of three candidates for the mining company's presidency by September 30. The chosen name would be presented by Vale Day – the annual conference with investors – scheduled for December 3.
Furthermore, analysts cite the upward revision of projections (guidance) iron ore production in 2024, combined with “increased confidence” in reaching a production level of 340 to 360 tonnes in 2026 and management’s positive tone on cost performance.
Worth it: buy or not?
Although Bradesco BBI analysts have reiterated their buy recommendation for Vale (VALE3) shares, they acknowledge that the mining company's shares have performed poorly over the past 12 months.
VALE3 has accumulated a 26% drop in dollars, compared to an average decline of 9% for global peers. In reais, the shares have accumulated a drop of more than 7% in 12 months.
But, for analysts, the mining company should benefit from an improvement in demand for iron ore, which usually starts in mid-September.
“We expect the company to benefit from seasonally stronger iron ore demand in China and a further improvement in its fundamentals” in the short term, Rafael Barcellos and Renato Chanes wrote in a report.
Bradesco BBI maintains its preference (top pick) by Gerdau (GGBR4) in the mining and steel sector.