Bloomberg News

Vale Target Cut 26% by Brascan, Citing Market Fall

November 21, 2008

Cia. Vale de Rio Doce, the world’s biggest iron-ore producer, may fare worse than previously estimated by Brascan Corretora, which cut its target price on the shares by 26 percent, citing falling demand and lower output.

Brascan set its target price for Vale at 52.07 reais ($21.19) from a previous projection of 70.15 reais, Rodrigo Ferraz, a Rio de Janeiro-based analyst with the brokerage, said today in a note to clients. Vale is also based in Rio.

“We believe the mining company will postpone some projects to avoid product over-supply,” said Ferraz, who kept an “outperform” rating on the company. Ferraz, who lowered his price target after the company cut production this month, also said he expects financing conditions to become “more adverse.”

Brascan has forecast a 10 percent decline in international iron-ore and pellet prices next year, reversing an earlier projection for a 15 percent rise, Ferraz said.

Vale fell 1.75 reais, or 7.78 percent, to 20.75 reais in Sao Paulo trading today. The stock dropped 54 percent in the past year before today, compared with a 45 percent decline in the benchmark Bovespa index.

To contact the reporter on this story: Diana Kinch in Rio de Janeiro dkinch1@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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