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Investing.com - JPMorgan has raised its price target on Rio Tinto Plc. (NYSE:RIO) to GBP61.70 from GBP54.50 while maintaining an Overweight rating on the mining giant’s stock. The company, currently valued at $111.6 billion, appears undervalued according to InvestingPro Fair Value metrics, while offering an attractive 4.36% dividend yield.
The investment bank placed Rio Tinto on Positive Catalyst Watch ahead of the company’s December 4 Capital Markets Day, which will be the first under its new CEO. The stock is currently trading near its 52-week high of $68.18, reflecting strong investor confidence. (InvestingPro subscribers can access 10+ additional key insights about Rio Tinto’s market position and financial health.)
JPMorgan expects Rio Tinto to "pro-actively execute shareholder value creation" in 2025-26, highlighting several potential strategic initiatives that could drive growth.
These initiatives include showcasing Rio Tinto’s copper volume growth of more than 30% by 2028, re-evaluating its lithium strategy, and finding a solution to restart share buybacks currently restricted by Chinalco’s ownership stake.
The firm notes that Rio Tinto appears undervalued compared to global mining peers, trading at 5.4x and 4.8x EV/EBITDA for 2025 and 2026 estimates respectively, with free cash flow yields of 5% and 8%.
In other recent news, Rio Tinto has announced several significant developments. The company, along with its joint venture partners Mitsui and Nippon Steel, will invest $733 million in the West Angelas Sustaining Project in Western Australia. This investment aims to maintain the hub’s annual production capacity of 35 million tonnes of iron ore. Additionally, Rio Tinto has commenced work on the Norman Creek access project at its Amrun bauxite mine in Queensland, following a $180 million investment. This project is set to enable mining in a region with substantial ore reserves.
In terms of mergers and acquisitions, Rio Tinto has signed an agreement with Chilean state-owned mining company ENAMI to acquire a 51% stake in the Salares Altoandinos lithium project in Chile. The company will contribute up to $425 million, including its Direct Lithium Extraction Technology, to this joint venture. On the analyst front, Morgan Stanley has raised its price target for Rio Tinto to AUD121, while Deutsche Bank has downgraded the stock to Hold, citing concerns over iron ore. These recent developments highlight Rio Tinto’s strategic investments and the varying analyst perspectives on its stock.
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