JP Morgan believes iron ore miners offer moderately more attractive valuations now that there are more balanced expectations for iron ore prices.
As a result, the investment bank has upgraded Rio Tinto to 'neutral' from 'sell' with an increased December 2024 price target of 6,000p (up from 5,400p).
The bank sees iron ore miners offering moderately more attractive valuations, with Rio Tinto now offering 2024/25 estimated spot free cash flow yield of 9%/10%.
Targets for BHP (rated 'neutral') increase to 2,550p from 2,320p while Anglo American – JP Morgan’s favoured pick, rated 'overweight' – lifted to 2,900p from 2,650p.
The investment bank said China steel demand has proven more resilient as infrastructure demand has offset poor property sector demand while excess output is finding its way to the export market.
“With the iron ore market relatively more balanced medium term, we raise our 2023-25 iron ore price forecasts +6%/+13%/17%,” JPM said.