Vale SA (ADR) (NYSE:VALE) continued to surge, despite facing an ongoing securities class lawsuit. However, the stock continues to be highly volatile and also continues to underperform the S&P 500. Analysts have also sprung into action and a number of analysts have updated their guidance on VALE, resulting in an average buy rating.

One reason for the increase in activity over the stock is that VALE is scheduled to release its earnings report on February 25. Analysts expect the company to report an EPS of $0.05. The guidance is up by 200%, from the last year’s report, when the company had an EPS of -$0.05. Consequently, trading activity for the stock has increased dramatically, bringing the stock to its current price of $2.62. Despite the exciting news, Vale continues to trade near the $2 range, while the analysts expect the stock to trade as high as $10.

The difference between analyst expectations and the actual stock price can mainly be attributed to the recent lawsuit faced by the company. As per the lawsuit, Vale is being charged for issuing false and misleading statements regarding:

  • The accident at Samarco, which resulted in spillage of toxic waste.
  • Vale’s contract with Samarco that allowed the company to dump its iron ore waste into the Fundao Dam.
  • The company’s inadequate plans to preserve the environment, public health and safety.

The stockholders were notified that they had until February 5th to file a lawsuit. However, it still remains to be determined how many, if any stockholders, had appealed to the court for any compensations. The future of the stock is highly dependent on the outcome of this lawsuit. If the outcome goes in favor of the company, it could be turning point for the stock. However, if things get awry for Vale, the stock would once again start to fall in the market.

Vale SA (ADR) (NYSE:VALE) gained a total of 10.08% in its share value, during the February 12 session, to close at $2.62.