Rio Tinto Shares Rise After Upgrade

Shares of Rio Tinto (NYSE: RIO) (LON: RIO) rose on Wednesday after analysts at Berenberg upgraded the stock to a “buy” rating from a “hold.”

As of 5:31 am (0931 GMT), Rio Tinto was trading 1.4% higher at £5,372.7.

This upgrade includes a new price target of 6,200 pence per share, up from the previous 5,600 pence. The change reflects the growing optimism about the company’s future prospects.

Berenberg analysts highlighted Rio Tinto’s strong positioning in aluminium and iron ore, and noted the positive impact of China’s recent economic stimulus on commodity prices, particularly for iron ore. The analysts expressed confidence that Rio Tinto could outperform competitors in the medium term due to its operational efficiency.

The upgrade followed a visit to Rio Tinto’s aluminium and titanium dioxide operations in Quebec, Canada. Berenberg emphasized the significance of these assets, especially the utilization of hydropower, which enhances cost efficiency.

Previously, there were concerns regarding Rio’s aluminium business after the Alcan acquisition, but Berenberg now sees a stronger growth potential for this division.

With this upgrade, Rio Tinto is positioned as an attractive option for investors interested in diversified mining, with Berenberg favoring it over rivals like BHP and Anglo American (JO: AGLJ).

Analysts noted that Rio Tinto’s capital expenditure profile focuses on operational efficiency and lower risk, setting it apart from competitors burdened with substantial investment commitments in growth projects.

Thus, Rio Tinto is projected to be a medium-term winner in the diversified mining sector, especially benefiting from favorable market conditions stemming from China’s economic interventions.

Berenberg pointed out the company’s asset quality and operational strength as crucial elements driving the improved outlook.