Rio Tinto Downgraded to Neutral at Citi

Rio Tinto (LON: RIO) (NYSE: RIO) was downgraded to Neutral from Buy at Citi on Thursday following its Capital Markets Day event.

Analyst Ephrem Ravi also cut his price target on the stock to 5,800p from 6,000p, telling investors in a research note that he has lowered his calendar year 2023 and 2024 EPS estimates by 11% and 6%, respectively.

The analyst explained that Rio Tinto’s shares have risen 28% since the end of October due to a “market euphoria around potential China reopening,” but he believes China reopening will occur in the second half of 2023, and in the meantime, there is a “sharp ex-China downturn” in steel production to get through.

In contrast, on Wednesday, RIO Tinto was added to Jefferies’s “Franchise Picks” list, which is a selection of the firm’s “most differentiated calls in liquid stocks.”

Jefferies analysts explained that they believe Rio Tinto is well-placed to benefit from a recovery in Chinese economic growth, including the stabilisation of China’s troubled property markets. Jefferies has a Buy rating and a 6,700p price target on Rio Tinto shares.

According to TipRanks, most analysts have a Hold rating on Rio Tinto shares. Four of 13 Wall Street analysts rate the stock at Buy, seven at Hold, and two at Sell. The average price target of 5,152.29p represents a potential 7.95% downside.

Rio Tinto’s London-listed shares are down 1.3% so far on Friday. Its US-listed share price closed Thursday’s session 0.79% higher.