Barclays upgrades Ferrexpo to 'equalweight'

In a note on European metals and mining, the bank said 2022 has been "the worst of times" for Ferrexpo, with the Ukraine war limiting logistics capacity to 50-75% of nameplate volumes and sending the company’s cost base into uncharted territory due to reduced output and explosive growth in energy input costs.

The bank said it had cut its earnings forecasts "materially" for 2022-204, reflecting lower iron ore prices, lower production and higher unit costs.

However, Barclays said it was closing its long -running underweight on the stock and upgrading to reflect the fact an investor today under plausible assumptions for the next two years could receive more than 60% of market cap back in cash, leaving limited residual value for the business as it stands, which trades on normalised price-to-earnings ex-cash using long-term prices of less than 3x and 27% free cash flow yield.

Barclays cut its price target on the shares to 215p from 265p .