The Fortescue Ltd (ASX: FMG) share price certainly has been in fine form this month.
Since the end of June, the iron ore giant's shares have risen by a sizeable 19%.
Can the miner's shares keep rising from here or have they peaked? Let's see what one top broker is saying about Fortescue.
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What is the broker saying?
According to a note out of Bell Potter, its analysts were impressed with the company's fourth quarter update this month. They highlight that every was better than they were expecting. They said:
This is a positive update from FMG from both an operational and strategic perspective. The quarter was materially better than expected, resulting in top of guidance production and a clear beat on costs for the quarter and the year. It was, in part, driven by a lower-than-assumed AUD:USD exchange rate and lower strip ratios, but still reflected a strong operational performance. Furthermore, the lower costs guided for FY26 are likely to drive earnings upgrades.
Another positive was the successful ramp up of the Iron Bridge operation. The broker adds:
Execution risk at Iron Bridge is easing, with the staged ramp-up progressing as planned. Strategically, we saw welcome signs of a return to capital discipline. The cancellation of its Arizona and Gladstone hydrogen projects and a US$500m cut to energy projects expenditure guidance for FY26 should increase free cash flow available for dividend distributions.
Is the Fortescue share price good value?
Despite the above, Bell Potter isn't recommending the mining giant's shares as a buy.
The note reveals that Bell Potter has retained its hold rating on its shares with an improved price target of $17.40 (from $15.87).
Based on the current Fortescue share price of $18.14, this implies potential downside of 4.1% for investors over the next 12 months.
And while a 5.4% dividend yield is expected over the period, this leaves the total potential return largely flat.
Commenting on its hold recommendation, the broker said:
EPS changes in this report are: FY25: +10%; FY26: +28% and FY27: +7%. FMG's core iron ore operations have outperformed on costs and could sustain EBITDA margins into FY26. However, we still forecast a lower iron ore price and declining earnings and dividends – though declining less than previously forecast due to the reduced energy division expenditure. We retain our Hold recommendation on a 10% higher Target Price of $17.40/sh.
