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Ferrexpo - UBS upgrades rating for iron ore producer to 'buy'

Published: 20:34 14 Oct 2011 AEDT

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UBS has upgraded Ukrainian iron ore pellet producer Ferrexpo (LON:FXPO) from 'neutral' to 'buy', it emerged today.

In a note, analyst Myles Allsop said the firm's shares had declined 33 per cent over the last three months and underperformed the sector by ten per cent and is still down 35 per cent from its high on July 5 of 495 pence.

He notes that iron ore prices have been broadly unchanged since July and that UBS's commodity team remained positive on iron ore - expecting prices to remain high on continued supply constraints from India.

Allsop added that he expected the market to remain tight in 2012/13 with global demand growing in line with supply.

He added that he expected the firm to progress with its expansion at its main mine - Yeristova and said the political risk remained high in Ukraine but is expected to ease with the Euro 2012 football tournament.

The firm's shares are currently trading at 339.9 pence and Allsop targets a 12 month price target of 440 pence for the stock.

On October 6, the company reported that its third quarter saw an increase in both total pellet production as well as production of higher-grade pellets.

August saw the second-highest month of pellet production (900,000 tonnes) in the company’s history, it said.

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