The Fortescue Ltd (ASX: FMG) share price has risen close to 50% since the low point of June 2025, as the chart below shows. The business recently reported its FY26 second-quarter production update, so this is a good time to consider whether the business is a buy.
The ASX mining share told investors that its total shipments of 50.5 million tonnes (mt) in the second quarter of FY26 led to shipments of 100.2mt in the first half of FY26.
Fortescue said that its average revenue was US$93 per dry metric tonne (dmt) of hematite (iron ore) in the second quarter, while the production costs (C1 unit cost) were US$19.1 per wet metric tonne (wmt) in the quarter.
Image source: Getty Images
Was this a strong update?
The broker UBS said that Fortescue's quarterly update was solid, with record iron ore shipments and strong realised prices for its iron ore. However, production costs rose more than expected because of "mine plan/strip ratio [waste material], and timing of production vs sales, but this is expected to reverse" in the second quarter, according to UBS.
The broker noted that Iron Bridge's ramp-up is progressing, with the three months to December showing more than 1mt of production.
After seeing the update, UBS decided to change its earnings estimates for the next few financial years. The FY26 earnings per share (EPS) forecast was reduced by 1%, the FY27 EPS forecast was increased by 2% and the FY28 EPS projection was hiked by 3%.
Is the Fortescue share price a buy?
UBS said that in terms of the outlook, the iron ore price continues to surprise, but with port stocks supposedly at three-year highs, the Simandou project in Africa ramping up and the muted growth of the Chinese economy, it appears that risks are "tilted to [the] downside".
The broker thinks that the Iron Bridge ramping up production and stabilising the strip ratio/cost will be important operations.
UBS also suggested that decarbonisation and emergent tailwinds will help lower production costs over the next year or two.
The broker forecasts that Fortescue could generate US$4 billion of net profit and US$1.31 of earnings per share (EPS) in FY26 and pay an annual dividend of A$1.27 per share.
UBS has a neutral rating on Fortescue shares with a price target of $20.
I think it's great to see that Fortescue's earnings can rise in the 2026 financial year, along with a solid dividend. But, I don't think this is the best time to invest. I'd prefer to buy when the conditions are weak with iron ore (which would likely mean a lower and more attractive Fortescue share price).
