Analyst Foresees Potential IPO For Vale's Base Metals Business, Upgrades Stock

RBC Capital markets analyst Tyler Broda upgraded Vale SA VALE to Outperform from Sector Perform at an increased price target of $15 from $13.
The analyst believes higher iron ore prices and positive expectations on stimulus can boost share price.
Also, the analyst thinks Vale's earlier disclosed sale of a 10% stake in its base metals business is 'well telegraphed' and may follow up by a potential IPO for this nickel and copper business in the coming times.
However, Broda thinks Vale's earnings can deteriorate if the company cannot restore volumes to capacity levels amid weak demand, mainly in the short term.
Nevertheless, the analyst is bullish on the capability of VALE's pellet, DRI and high-grade inputs, expecting them to hold pricing better than lower-quality production at its peers.
Broda expects adjusted EPS of $2.16 in 2023, $1.21 in 2024 and $2.00 in 2025.
Price Action: VALE shares are trading higher by 1.10% at $13.76 on the last check Tuesday.