Goldman Sachs tips Fortescue shares as a buy on higher iron ore price forecasts

Goldman Sachs is tipping the iron ore price to rise in 2019.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fortescue Metals Group Limited (ASX: FMG) shares are being tipped as a buy by Goldman Sachs after the powerful research house updated its iron ore price forecasts for the year ahead. 

Recently Goldman's commodity team upgraded its iron ore price forecasts for 2019, 2020 and 2021 to an average of US$100 per tonne, US$90 per tonne and US$75 per tonne respectively.

Its more bullish iron ore forecasts are still largely based on an estimate that supply will be short though to 2020 thanks to robust Chinese demand for the key steel-making ingredient.

Goldman's also expects slower supply growth out of major miners such as Fortescue, Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).

Over the fourth quarter of 2019 Goldman's is even tipping the iron ore price to hit US$110 – US$115 tonne as Chinese demand strength and supply shortages combine. 

As a result it's upgraded its FY 2020 earnings per share forecast for Fortescue by a significant 26% and slapped a $9.80 12-month share price target on it.

If Goldman's is on the money Fortescue shares have some 27% upside over the year ahead. 

Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

You can find Tom on Twitter @tommyr345

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 Scott Phillips.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »