Leading broker tips the Fortescue Metals Group Limited share price to fall

In afternoon trade the Fortescue Metals Group Limited (ASX: FMG) share price has recovered from its early decline and is higher by 1% to $4.75.

Unfortunately for its shareholders this slight gain doesn’t do much to lessen its sizeable year-to-date decline. The iron ore producer’s shares are down close to 20% since the turn of the year.

But there could be more declines to come according to one broker.

A research note out of Citi this morning reveals that its analysts have downgraded Fortescue’s shares from a neutral rating to a sell rating. Furthermore, they have cut its price target down to $3.90.

Based on its current share price, that would mean potential downside risk of approximately 18%.

With iron ore inventory levels in China at high levels and more low-cost supply hitting the market, Citi has become more bearish on iron ore prices.

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Motley Fool contributor Motley Fool Staff has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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