Rio Tinto Shares Downgraded as Analyst Reassesses Risk/Reward

Rio Tinto’s (LON: RIO) shares were downgraded by Morgan Stanley, which cut its rating to Equal Weight from Overweight in a note on Tuesday, saying the miner’s sharp re-rating has left the balance of risks looking more evenly matched. 

The firm lifted its price target slightly to 6,230p from 6,090p but said the stock’s strong performance over the past year means the upside is now less compelling.

Rio’s London-listed shares have climbed 12.6 percent year to date and are up 37.7 percent over the past 12 months, outpacing peers and benefiting from stronger commodity sentiment, operational improvements and expectations around potential sector consolidation.

Morgan Stanley said a possible merger with Glencore could still create significant strategic and financial advantages, but the analyst highlighted that the “complexity and structure” of any transaction would be central to its execution and eventual value. 

The bank noted that while the industrial logic of combining two of the world’s largest diversified miners could generate substantial synergies, the uncertainties around governance, regulatory approval and asset integration temper that potential.

The downgrade follows a series of mixed analyst views in recent weeks. HSBC lowered its rating to Hold in late January, while Erste Group upgraded Rio to Buy, citing robust return on equity and expected revenue gains in 2026. RBC Capital also raised its price target earlier in the month but maintained a neutral stance.