Zacks Investment Research upgraded shares of Rio Tinto plc. (RIO) from UNDERPERFORM to NEUTRAL on November 30, 2012, with a target price of $52.00.
We upgrade Rio Tinto Plc. from Underperform to Neutral based on the cost saving initiatives the company has undertaken, along with the divestiture programs the company follows so rigorously. Rio Tinto also has a very strong balance sheet with disciplined investments in projects which can earn high returns in the future. Moreover, demand growth for seaborne thermal coal combined with high prices of mineral also pave the way for future growth. However, execution risks due to resource nationalism, governmental delays on mining permit issues and tax policies as well as natural disasters raise our concern. Also, the impact of higher energy and raw material cost may affect margins and lower earnings. Moreover, a highly competitive metals and mineral market, increased resource competition and declining ore grades induce our outlook on the stock.
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