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Brokers take a shine to Rio Tinto. Here's why..

Published: 10:32 07 Dec 2016 GMT

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City analysts were quick to comment on the miners today

There’s been a rash of broker changes in the mining sector, which in morning trade dragged the FTSE 100 higher.

Kaz Minerals PLC (LON:KAZ) was on the receiving end of a downgrade from the highly rated team at Deutsche Bank, which moved to ‘sell’ from ‘hold’ on valuation grounds.

The stock is currently trading at a 36% premium to Deutsche’s 240p a share price target.

The house doesn’t see much value elsewhere in the sector either.

“We doubt that major M&A will make a comeback, and after the 100% rally year to date, we now have little upside to our target prices,” Deutsche said in a comprehensive note on the diggers.

“We expect the blanket sector trade will yield to stock specific opportunities and thus we now take a more neutral view on the miners.”

Its top pick among the big boys is Rio Tinto PLC(LON:RIO), which it rates ‘buy’ all the way up to £37.

Rio is also a favourite of UBS, which reckons investing in the Anglo-Aussie major is “all about the cash”.

“We expect it to be the first diversified miner to materially step up returns to shareholders, given its balance sheet strength and robust free cash flow generation,” the Swiss bank said in a note to clients.

It is a ‘buyer’ to £35 a share (current price £31.50).

UBS and Deutsche are in the majority with their positive assessment of Rio’s prospects. 

Of the 17 analysts logged by the Broker Forecasts site as following the company, 11 are buyers; only two hold ‘sell’ recommendations; the remainder think the stock is fully valued.

In the past six months the consensus price target has advanced from £22 a share to just under £30 currently.

In a separate note, Credit Suisse tweaked higher its price targets on Antofagasta PLC (LON:ANTO), Anglo American PLC (LON:AAL) and Glencore PLC (LON:GLEN), but repeated its ‘neutral’ recommendations on the three.

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