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Iron Ore Surge: How Are Analysts Rating the Miners?

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Part 6
Iron Ore Surge: How Are Analysts Rating the Miners? PART 6 OF 11

A Look at the Recent Analyst Ratings for Rio Tinto

Analysts’ ratings

Of the 16 analysts covering Rio Tinto (RIO), 56% gave it a “buy” recommendation, 25% gave it a “hold” recommendation, and 19% gave it a “sell” recommendation. In comparison, BHP Billiton (BHP) and Vale (VALE) have each received “buy” recommendations from 33% and 30% of the analysts, respectively.

US-focused (DIA) iron ore miner Cliffs Natural Resources (CLF) has “buy” recommendations from 22% of the analysts covering its stock.

A Look at the Recent Analyst Ratings for Rio Tinto

A Look at the Recent Analyst Ratings for Rio Tinto

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Analysts’ opinions

Several analysts have revised their target prices for Rio Tinto in the past few months. Credit Suisse (CS) upgraded Rio Tinto from “neutral” to “outperform” on December 7, 2016. Credit Suisse stated, “We upgrade Rio from Neutral to Outperform and increase our target price to £36 (from £27.50). Entering 2017 we switch preference from BHP to Rio Tinto on: 1) Vanishing iron ore surpluses as steel production rises and supply growth declines, 2) Attractive valuation, 3) Balance sheet strength enabling additional shareholder returns.

“While we believe spot iron ore prices at $80/t are elevated and reflecting over-exuberant markets, we now forecast $65/t for 1Q-17, an average $55 for 2017 and $53 in 2018.”

HSBC initiated its coverage of Rio Tinto stock with a “buy” rating in November 2016. It had a target price of 33 British pounds on the stock, which was revised upward to 40 British pounds.

Rio Tinto stock was upgraded from a “sell” to a “neutral” recommendation by Citigroup (C) on December 5, 2016. Citigroup is now more positive in its outlook regarding commodities going into 2017.

Recent changes

Following are the recent changes to Rio Tinto’s (RIO) target prices:

  • Macquarie reduced Rio Tinto’s target price 4% on March 14, 2017.
  • On March 8, 2017, Deutsche Bank (DB) raised its target price for Rio Tinto to 72 Australian dollars from 70 Australian dollars.
  • J.P. Morgan (JPM) raised Rio Tinto’s target price from 4,000 pence to 4,200 pence on March 7, 2017.
  • On February 14, 2017, Morgan Stanley raised RIO’s target price from 3,220 pence to 3,300 pence.
  • RBC also raised Rio Tinto’s target price from 3,700 pence to 4,000 pence on February 13, 2017.

 

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