Vale SA (ADR)(NYSE:VALE): Zacks Reaffirmed “Hold” Rating Driven by Weaker 1Q14 Results


Dallas, Texas 05/27/2014 (FINANCIALSTRENDS) – The stock of Vale SA (ADR) (NYSE:VALE) was reassigned a “hold” rating by the equities research analysts at Zacks who recently updated their research report for the stock. Vale SA reported weaker 1Q14 results with 33.9% year over year drop in their earnings per ADR and 10.7% decrease in 1Q14 revenues. The company reported earnings of $0.4 per ADR on revenues of $9.5 billion and the decrease was attributed to lower prices for most of its commodities.

More from Research Report:

Analysts at Zacks mentioned that Vale SA (ADR) (NYSE:VALE) is exposed to various geopolitical, economic and social risks given its international presence. Moreover, negative impacts from foreign currency transactions also contracted the margins. In addition, company financials are largely dependent on market movement and economic activities and during the quarter higher operational costs also contributed to weaker results. The increased costs were largely because of quality improvement, product diversity and reliability initiatives.

However, the company is increasing its production volumes over past couple of quarters along with cost saving measures and also intends to keep expanding its production in near future. The company has reported improvement in its Carajas and Moatize mine. The company reported record production of iron ore and pellets as well as substantial year over year increase in production of coal during 1Q14. As far operating expenses are concerned, the company reported 15% decrease in its research and development expenses and 20% decrease in its selling, general and administrative expenses.

Analyst Ratings:

Several other investment analysts have also commented on the stock of Vale SA (ADR) (NYSE:VALE) including analysts at Scotia bank who reaffirmed a “sector perform” rating on the stock. Analysts at JPMorgan Chase & Co. also reaffirmed their “overweight” rating with a price target of $25. Analysts at Canaccord Genuity reduced their price target to $18.50 from $19. The stock of Vale SA has been assigned a “buy” rating by six analysts; a “hold” rating by six analysts; and a “sell” rating by one analyst.

Stock Update:

On Friday, the stock of Vale SA lost 0.30% and closed at $13.18.