Macquarie has tweaked its iron ore shipment expectations for Rio Tinto, lifting 2019 slightly but reducing 2020 slightly on a slower ramp-up at Koodaideri. The completion of Rio’s new iron ore developments should reduce costs in the medium term, the broker suggests, but for now expected costs rise 10%.
The net is a slight lift to near term earnings forecasts and a slight trimming thereafter. As always, the broker points out that were spot iron ore prices to be used in valuation, this would imply 20% upside to 2020 forecasts and 60% to 2021.
Outperform and $102 target retained.
Sector: Materials.
Target price is $102.00.Current Price is $96.72. Difference: $5.28 – (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).
