The departure of certain executives is, in Macquarie’s view, a key step in regaining stakeholder trust after the Juukan Gorge incident. A search for a replacement to the outgoing CEO is the catalyst for the stock in the short term.
In operating terms, Rio Tinto continues to benefit from buoyant iron ore prices, with the broker noting that 90% of earnings in the first half were from this division. Outperform rating and $114 target retained.
Target price is $114.00.Current Price is $99.86. Difference: $14.14 – (brackets indicate current price is over target). If RIO meets the Macquarie target it will return approximately 12% (excluding dividends, fees and charges – negative figures indicate an expected loss).