Investing.com — shares rose over 3% in London trading Thursday after two major brokerages upgraded the miner to Buy, citing an attractive valuation, improving cash flow and a growing copper business following the company’s first-half results released on July 29.
Berenberg raised its rating to Buy from Hold, lifting its price target to 8,600 pence from 8,100 pence, while Goldman Sachs also moved to Buy from Neutral, increasing its 12-month target to £82 per share from £81. Rio’s stock had pulled back roughly 15% from its June highs, which Goldman said created “an attractive entry point.”
Both houses pointed to Rio’s valuation relative to peers, particularly . Berenberg noted that Rio offers “a more compelling free cash flow (FCF) yield and a better dividend yield over the same period,” while trading at a three-year forward average EV/EBITDA of 5.3x compared with BHP’s 6.8x.
Goldman put Rio’s valuation at 0.65x net asset value versus peers around 0.9x, and about 5.7 times next-twelve-months EBITDA versus 7x for BHP.
Berenberg analysts framed the call as a “tactical profit flip from BHP into Rio Tinto,” arguing that many of Rio’s major capital projects are now ramping up and generating cash, whereas BHP is embarking on a fresh capital expenditure cycle at projects such as Jansen potash and Copper South Australia. Berenberg expects Rio’s copper volumes to rise about 19% by 2028 versus 2026.
Commenting on the group’s first-half performance, Goldman analysts said “realised pricing and costs performed well, cash flow and net debt were ahead, and guidance was unchanged.” The team expects further delivery on Rio’s cost-out programme and potential catalysts from $5-10 billion of planned divestments, including a possible sale of its Pilbara power infrastructure, which it estimates could be worth $3-4 billion.
Rio has increased its cost-out target to a $1.8 billion annualised run rate by year-end, up from $650 million, with $1.3 billion already achieved in the first half. The company also left 2026 production and capital expenditure guidance unchanged, with capex of roughly $11 billion for 2026 and 2027, while lowering its expected 2026 tax rate to about 25% from a prior 30% estimate.
Both brokerages cited Rio’s copper growth outlook as a key differentiator. Goldman forecasts copper-equivalent production growth of about 10% and EBITDA growth of about 30% between 2025 and 2030, driven by the ramp-up of Oyu Tolgoi’s underground mine, higher grades at Bingham Canyon, and the development of the Simandou iron ore project in Guinea.