At a glance, Rio Tinto’s fourth-quarter update fell shy of UBS’ estimates, as did guidance – Pilbara shipments, aluminium and mined copper all missing consensus forecasts.
Delays at Gudai-Darri, Kitimat and Jadar added to the malaise, although the company reports progress at Simandou and Oyu Tolgoi.
High iron-ore prices continue to benefit the producer but UBS says 2022 iron-ore guidance disappointed, shipments, and grades both deteriorating, as did aluminium. The picture for copper was better, UBS expecting the metal will partly offset declines in iron ore and aluminium.
EPS forecasts fall -2% and -3% for FY21 and FY22.
Sell rating retained, UBS believing the iron-ore price risk is to the downside. Target price steady at $80.
Sector: Materials.
Target price is $80.00.Current Price is $109.65. Difference: ($29.65) – (brackets indicate current price is over target). If RIO meets the UBS target it will return approximately -37% (excluding dividends, fees and charges – negative figures indicate an expected loss).
