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Investing.com - Morgan Stanley raised its price target on Rio Tinto (NYSE:RIO) (ASX:RIO) to AUD121.00 from AUD118.00 on Monday, while maintaining an Equalweight rating on the mining giant’s stock. The company, with a market capitalization of $101 billion and a healthy 4.71% dividend yield, has demonstrated strong performance with a 13.12% return year-to-date.
The investment bank updated its model for the first half of calendar year 2025, which resulted in a 2.7% reduction to its fiscal year 2025 earnings per share estimate for Rio Tinto.
Morgan Stanley’s fiscal year 2026 and 2027 EPS estimates increased by 0.1% and 2.3%, respectively, following adjustments to depreciation and aluminum forecasts.
The firm’s base case valuation for Rio Tinto rose by 1% to AUD119.50 per share, while its bull case and bear case values increased by 3% and 13% to AUD242.50 and AUD52.50 per share, respectively.
The price target adjustment represents a 3% increase from the previous target, driven by the higher base valuation and higher spot commodity prices.
In other recent news, Rio Tinto has initiated a $180 million investment in the Norman Creek access project at its Amrun bauxite mine in Queensland, Australia. This project will enable mining in the Norman Creek region, which holds about half of Amrun’s declared ore reserves. Construction is already underway, including a 19-kilometer haul road, camp accommodations, and a communications tower. Additionally, Rio Tinto has signed an agreement to acquire a 51% stake in the Salares Altoandinos lithium project in Chile, partnering with Empresa Nacional de Minería. The company plans to invest up to $425 million in cash and non-cash contributions to develop the project.
In the realm of analyst ratings, both Deutsche Bank and Berenberg have downgraded Rio Tinto’s stock from Buy to Hold. Deutsche Bank cited concerns related to the recent rebound in iron ore prices. Berenberg also expressed concerns about iron ore prices and other headwinds, noting that the stock may struggle to rerate despite its relatively cheap valuation. These developments highlight significant shifts in Rio Tinto’s strategic investments and market perceptions.
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