JP Morgan's commodities team raised its 2014 and 2015 forecasts for nickel by 22% to $18,540 a ton and by 52% to $24,000 a ton, respectively. The team said the raised prices for nickel should help boost Vale's 2014 and 2015 EBITDA by 4% and 10%, respectively.
The nickel price increases will add $600 million to 2014 free cash flow estimates, and$1.7 billion to 2015 free cash flow estimates.
About 90% of Vale's EBITDA comes from iron ore, with nickel making up a small part of the company's business.
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TheStreet Ratings team rates VALE SA as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate VALE SA (VALE) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and disappointing return on equity."