According to a new report by the bank, the ability of mining giant Vale to execute on its capital spending plans will be paramount for its stock to rise, according to a Morgan Stanley report on Monday.

Analysts Carlos de Alba and Bruno Montanari said that Peru's Bayovar, Vale's first greenfield project outside Brazil, "offers a good example that the company can deliver."

Both analysts reiterated their overweight on Vale's ADRs, with a year end price target of USD 46. While it is hard to predict whether iron ore prices will sustain their current levels, tight supply for another couple of years could help Vale, they noted.

Vales attractive pipeline of expansion projects in copper, coal and nickel should help improve the companys product and geographic diversification.

(Sourced from Thomson Reuters)