Target price of $22 after minor changes to our adjusted 13 EPS
S&P MAINTAINS BUY RECOMMENDATION ON ADSS OF VALE
(S&P Capital IQ)
We maintain our target price of $22 after minor changes to our adjusted 13 EPS forecast of $2.57 as Vale's Q2 adjusted EPS of $0.64 was in line. Reported EPS of $0.08 was impacted by derivative/currency losses due to the weaker Real and drives a $0.56 cut to our reported 13 EPS forecast of $1.99. Underlying EBIT of $3.6B was down 17% from a year ago due to lower commodity prices, but cost savings of $700M helped mitigate this. We see a stronger H2 with iron ore prices $15/tonne higher than a year ago due to low inventories and robust demand, while cost savings should help.