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