This report is an updated version of the report published on 8 August 2025 at 12:16 PM AEST.

Fortescue Limited (ASX: FMG)

FMG engages in the exploration, development, production, processing, and sale of copper, gold and lithium deposits, and rare earth elements, which own and operates the Chichester Hub, and the Solmon Hub mining projects located in the Hamersley ranges of Pilbara, Western Australia.

Recommendation Rationale – SELL at AUD 18.790 

• Financial Highlights: FMG’s revenue declined by 20% YoY to USD 7,638mn in 1HFY25 vs USD 9,512mn in 1HFY24. This was driven by a lower average revenue for Hematite, which fell to AUD 85 per dry metric tonne (dmt). Attributable NPAT also decreased by 53% YoY to USD 1,553mn in 1HFY25 vs USD 3,337mn in 1HFY24.
• Trading Near the Resistance: FMG stock has surpassed its R2 level recommended on 11 April 2025. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/Sales, EV/EBITDA, Price/Earnings, Price/Cash Flow) are higher than Industry Median of the Basic Materials Sector.
• Market Risk: The company's aggressive investment in green hydrogen and renewables involves substantial capital and significant execution risk. Project success depends on reductions in technology costs and realization of commercial viability, which may take years longer than projected. The shift is strategically ambitious but brings uncertainty regarding future profitability and return on investment.

FMG’s Daily Price Chart

Valuation Methodology: Price/Earnings Multiple Approach (FY June'26E) (Illustrative)

Stock might trade at a slight premium to its peers considering the FY26 shipment guidance, growth from Iron bridge, proactive cost management, and contribution from key project. For conducting the valuation, the following peers included: BlueScope Steel Ltd (ASX: BSL), Champion Iron Ltd (ASX: CIA), Fenix Resources Ltd (ASX: FEX) and others have been considered

Considering that the stock has surpassed its R2 level, rally in share price, current trading level, and risks associated, the share price can face consolidation at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 18.790, as of 8 August 2025, at 11:11 AM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 8 August 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Note 5: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.