Sign up UNITED KINGDOM
Proactive Investors - Run By Investors For Investors

Rio Tinto upgraded to 'buy' by SocGen on stronger commodity price outlook

The price target has been lifted to 4,400p from 3,600p on the back of the French broker’s “more constructive” stance on iron ore
Shipping iron ore
SocGen said its previous forecast of an iron ore price of US$45 a tonne is beginning to look overly bearish.

Societe Generale has raised its valuations for all the diversified miners on the back of a stronger commodity price outlook and upgraded Rio Tinto PLC (LON:RIO).

Rio is SocGen’s second top pick in the sector behind Glencore PLC (LON:GLEN), following an upgrade to ‘buy’ from ‘hold’.

READ: Generosity of mining companies driving dividend payments towards annual record

The price target has been lifted to 4,400p from 3,600p on the back of the French broker’s “more constructive” stance on iron ore in the context of stronger-than-expected Chinese demand and a bit of discipline on the part of producers.

SocGen said its previous forecast of an iron ore price of US$45 a tonne is beginning to look overly bearish.

“Although iron ore is likely to stay under pressure in the coming months, given looming seasonal curbs in Chinese steel output, we would watch for potential opportunities to build exposure to Rio should the stock be hit by sentiment,” SocGen said.

Of course, Rio Tinto would not be a diversified miner were it purely an iron ore play, and the French finance house notes that copper and aluminium are set to become increasingly important drivers of value for Rio over the next five to 10 years as commodity prices continue to recover and the company delivers on key growth projects.

READ: Rio Tinto hit with FCA fine over financial reporting process for Mozambique purchase; US, Australian regulators also investigating

The upshot is SocGen thinks near-term earnings prospects belie the long-term growth potential, with an improving free cash flow translating over time into stronger cash returns for shareholders.

View full RIO profile View Profile

Rio Tinto Timeline

Related Articles

Wayne-Rossiter-photo.JPG
July 28 2017
We are joined exclusively by Wayne Rossiter, CEO, in Proactive Q&A Sessions™.
LesothoBrown_hires.jpg
August 03 2017
New chief executive will will push down costs and go on the hunt for deals
6_Traders_at_work_582e3c2af1b55.jpg
November 17 2016
The exercise of options by Pantoro’s managing director provides the company with cash funding and shows that senior management believe in the company’s future.

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2017

Proactive Investor UK Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use