Sanford Looks At Impact of Prolonged Commodity Weakness -- Market Talk
January 26 2015 - 6:10AM
Dow Jones News
1139 GMT [Dow Jones]--Prolonged softness in commodity prices
would have a variable impact on global mining operators, according
to new research by Sanford Bernstein analyst Paul Gait. Street
forecasts for Vale and Anglo American are pricing in earnings
before interest, taxes, depreciation and amortization 21% and 20%
worse, respectively, than the companies would pull in assuming spot
prices remain at their current depressed levels, Gait's analysis
shows. The miners should also benefit from lower oil prices and a
strengthening U.S. dollar, which Gait estimates could lower
production costs 10% on average. Glencore, BHP Billiton and Rio
Tinto, however, would see revenue fall by 25%, 13% and 7%,
respectively, from the Street's current 2014 estimates, if
commodity prices stay where they are. (scott.patterson@wsj.com)
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