Shares of Rio Tinto (NYSE: RIO) declined 3.4% at the time of writing after it announced disappointing production results for the first quarter of 2021.
Production Details
The company said that Pilbara iron ore production declined 6% year-over-year to 71.7 million tonnes and Pilbara shipments tanked 8%. The company expects to perform better in the second half of 2022 on the back of “commissioning and ramp up of Gudai-Darri, commissioning of the Robe Valley wet plant and improved mine pit health.”
Bauxite production remained stable at 13.6 million tonnes in the first quarter. Titanium dioxide slag production declined 2%.
Further, aluminium production of 0.7 million tonnes was 8% lower year-over-year due to reduced capacity at Kitimat smelter. The capacity has been impacted by the strike that commenced in July 2021. Mined copper production rose 4% on elevated recoveries and grades at Kennecott.
Stock Rating
Last month, Jefferies analyst Chris LaFemina maintained a Hold rating on Rio Tinto and raised the price target to $92 from $86. The new price target implies 14% upside potential from current levels.
The stock has a Hold consensus rating based on four Holds and one Sell. Rio Tinto’s average price forecast of $92 implies 14% upside potential.
News Sentiment
News Sentiment for Rio Tinto is Neutral based on 10 articles over the past seven days. Half the articles have Bullish sentiment, compared to a sector average of 60%, and the remaining have Bearish Sentiment, compared to a sector average of 40%.
Conclusion
While the company is making efforts to improve its production levels, operating or weather-related challenges continue to offset them. As of now, a wait-and-watch strategy is expected to help investors interested in this stock.
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