Rio Says All The Right Things
Greg Peel
A check of FNArena's Broker Call archive shows that on the 1st of September, 2010, BA-Merrill Lynch upgraded Rio Tinto ((RIO)) to Buy. Why is this significant in August 2012? Because it marks the date the last of the leading brokers in the FNArena database held anything other than a Buy or equivalent rating on the stock. Merrill's upgrade brought the total to eight from eight, and from that day to now all eight brokers in the database have maintained a Buy rating on Rio.
In September, 2010, Rio's share price was bottoming around $70 before heading towards $90. It didn't quite get to $90, and today it is $56, having bounced off a price near $50 last month. Over the period Rio has scored and maintained a full set of Buys in the FNArena database, its share price has fallen 40% from its peak. When Rio last reported full-year earnings a year ago, it was trading around $70. Analysts remained excited about Rio's underlying value. The shares are since down 20%.
Source: eSignal
After the closing bell on Bridge Street yesterday, Rio reported its first half 2012 earnings. Given the late release not all FNArena brokers have published updated reports, but of the six that have, all have reiterated Buy ratings. As the result was well-received, it is not likely we'll see any downgrades in tomorrow's reports either. Rio will carry a full set of Buys into the second half.
One might be tempted to add, "for what it's worth".
The ratings may have remained intact but brokers' 12-month price targets have certainly come down, from an average of over $100 a year ago to $84.57 today. That's still represents 50% upside to target.