Morgan Stanley now expects iron ore rice to average $105 a ton for 2014, compared to $118 a ton forecast in May, and $135 a ton average in 2013. The firm expected an average price of about $90 a ton in 2015, a 21% decrease from previous estimates.
Iron ore prices recently fell below $92 for the first time since 2012 due to increased output by mining companies.
Morgan Stanley analysts downgraded Vale to "equal weight" from "overweight" with a price target of $15.20 due to the lower iron ore estimates.
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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 good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and a generally disappointing performance in the stock itself."