The Fortescue Metals Group Limited (ASX: FMG) share price was a positive performer on Monday.
The mining giant's shares rose 2% to end the day at $15.80.
This means the Fortescue share price is now up approximately 9% since this time last month.
Is the Fortescue share price a bargain buy?
Opinion on the Fortescue share price continues to be highly divisive, with some brokers believing its shares are vastly overvalued and others believing them to be dirt cheap.
In respect to the latter, the team at Bell Potter continue to see a lot of value in the Fortescue share price.
A recent note reveals that its analysts have a buy rating and $19.75 price target on its shares. This implies potential upside of 25% for investors over the next 12 months.
In addition, the broker expects the iron ore miner to pay a $3.07 per share fully franked dividend in FY 2022. This equates to a very attractive fully franked yield of 19.4%, which stretches the total potential return to almost 45%.
In response to its first quarter update, Bell Potter said: "Strong free cash flows, good cost control and an 'on-track' production performance emphasise the quality of the business and we retain our Buy recommendation."
What about the bears?
One of the most bearish brokers out there is Goldman Sachs. This morning the broker retained its sell rating and $11.00 price target on the company's shares. Based on the current Fortescue share price, this implies potential downside of just over 30% for investors.
There are four key reasons why Goldman is bearish on Fortescue. These include its relative valuation, the widening of low grade iron ore discounts, execution and ramp up risks on the Iron Bridge project, and uncertainties around Fortescue Future Industries (FFI) diversification and Pilbara decarbonisation.
In respect to the latter, the broker believes decarbonising the Pilbara could cost Fortescue over US$7 billion and requires +US$50 per tonne carbon or a green premia to be NPV positive.
Goldman concluded: "We have an Underperform rating on FMGAU. In our view, FMGAU is set to face headwinds from lower iron ore prices and remains an unlikely IG upgrade candidate due to its concentrated portfolio (single-commodity exposure in one region of Australia) and the strategic uncertainty implied by its openness to entering other markets (e.g. renewables). The company is facing execution risk at Iron Bridge from increased project capex and a team reorganization."
