Fortescue Metals Group Limited (ASX: FMG) shares have been out of form in recent weeks.
Since this time last month, the iron ore miner's shares have tumbled 11%.
During the same period, the S&P/ASX 200 Index (ASX: XJO) has risen almost 4%.
Where next for Fortescue shares?
Unfortunately for shareholders, one leading broker believes Fortescue shares could continue to slide.
According to a note out of Morgans, its analysts have retained their reduce rating and $19.30 price target on the company's shares.
Based on the latest Fortescue share price of $22.30, this implies further downside potential of almost 14%.
What did Morgans say?
Morgans has concerns over how Fortescue shares may perform once they go ex-dividend next month.
Its analysts highlight that in February, all three large miners fell by more than three times their dividend in the month after going ex-dividend.
Last week it explained: "With Rio Tinto Limited (ASX: RIO) due to go ex-dividend tomorrow (12 August) this is a pressing concern and material to our short-term investment strategy for the bulk miners. The iron ore miners have shown a diminishing ability to carry their dividends as the iron ore cycle has progressed."
"In February, we saw all three large miners fall by more than three times their dividend in the month after going ex-dividend. With more signs of the iron ore cycle slowing, we see a similar risk this dividend season. In particular for RIO & BHP Group Ltd (ASX: BHP), who have both outperformed iron ore prices over the last month, while Fortescue's share price has trailed its bigger peers."
"While we expect the big miners to come under selling pressure once they go ex-dividend, we do expect strong equity market support around their dividend announcements. For example RIO which rose on a large dividend being announced at its result while 1H21 earnings slightly trailed estimates. This is a tactical call not relevant for all long-term investors."
But it doesn't stop there. Morgans also has operational concerns as well.
It concluded: "FMG is battling difficult execution/cost pressures around its Iron Bridge magnetite project, slipping C1 cost performance and growing market concern around its aggressive grassroots push into global renewables."
