The Fortescue Metals Group Ltd (ASX: FMG) share price has delivered outsized returns over the previous 12 months.
Whereas the S&P/ASX 200 Index (ASX: XJO) has posted a return of around 23%, Fortescue shares have soared 36.5% into the green.
Despite this, Fortescue shares have lagged the broad index this year to date, posting a return of only 4%.
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So is it a bad time for Fortescue Metals shares?
According to one leading broker, thankfully, this may not be the case.
An equity research report from JP Morgan reveals the investment bank still holds its conviction on Fortescue shares, reinstating a price target of $30 and overweight rating.
This price target implies an upside potential of approximately 22% from Fortescue's current trading price of $24 and change.
Fortescue Metals also paid a dividend of $1.20 per share over the past 12 months, giving a dividend yield of 3.47% at the time of writing.
Therefore, it stands to reason that JP Morgan believes the Fortescue Metals share price has more room to run just yet.
What did JP Morgan say?
Analysts at JP Morgan were pleased with Fortescue's "outstanding set of (Q4 FY21) results" that encompassed "record achievements, achieved price and in line costs".
Additionally, Fortescue's net cash position "materially exceeded our [JP Morgan's] expectations and consensus".
This also weighed in on the broker's investment thesis. It stated that Fortescue "offers exposure to long-life operations, with attractive margins and expansion optionality over the long term".
The broker also retained its "positive investment view" on the company from a number of tailwinds.
It stated: "Our FY22 earnings sit 16% above consensus…We continue to believe iron ore markets will remain buoyant on a multi-year view, and that the [Fortescue] stock can re-rate to reflect the company's outstanding FCF generation".
Bringing it all together, JP Morgan sees a robust investment case for Fortescue Metals shares.
Its final view on the company is "overweight rated on a sector-leading dividend yield, strong iron ore market conditions, significant mark-to-market upgrades" and attractive upside potential from its price target of $30.
Foolish takeaway
The Fortescue Metals share price has underperformed the broad index this year to date, although has delivered outsized returns over the last 12 months.
Despite this, Fortescue shares dipped 4% into the red over the past week.
JP Morgan retains its bullish outlook on Fortescue's shares, assigning a price target of $30 based on its Q4 FY21 results. They maintain their overweight rating.
