RBC Capital Markets has tweaked down its share price expectations for Rio Tinto PLC (LSE:RIO) after the mining major halved the dividend earlier this week after earnings for the first six months undershot expectations.
“Rio Tinto's result was largely in line to ahead of our forecasts but missed consensus EBITDA,” said RBC in a note to clients.
“The dividend miss focuses investors on the challenges of the Rio Tinto investment case when growth-spend is rising into lower prices and high cost -nflation: free cash flow is compressed.”
As a result, the Canadian investment bank has lowered its price target for Rio to £47 a share from £49. The stock is currently changing hands for £49.21.
RBC maintains its ‘sector perform rating’, but points out that the upside is limited.