Macquarie has marked to market December quarter commodity prices and foreign exchange rates and remains positive on copper exposure going into 2021.
Copper has been a base metal outperformer since mid-2020 and the broker expects the trend to continue into 2021 on global stimulus and electrification. In addition, Chinese demand is remaining buoyant and the ex-China stimulus is ramping up.
While copper is a positive contributor to earnings and accounts for 9% of net present value (NPV) for Rio Tinto, the major driver for the diversified miner remains buoyant iron ore prices.
The Outperform rating and target of $127 are unchanged.
Target price is $127.00.Current Price is $120.52. Difference: $6.48 – (brackets indicate current price is over target). If RIO meets the Macquarie target it will return approximately 5% (excluding dividends, fees and charges – negative figures indicate an expected loss).