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CFRA maintains Buy rating on Rio Tinto with GBP56.00 target

EditorLina Guerrero
Published 10/16/2024, 02:11 PM
ABT
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On Wednesday, CFRA maintained its Buy rating on Rio Tinto Plc (NYSE:RIO:LN) (NYSE: RIO), with a stable price target of GBP56.00. The firm's target price suggests a valuation at an enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) multiple of 5.0x based on their 2024 EBITDA estimates. This multiple is higher than Rio Tinto's three-year average forward EV/EBITDA of 4.5x.

Rio Tinto's third-quarter 2024 Pilbara iron ore shipments saw a modest year-over-year increase of 1%. However, the updates from other operations were not as positive. The company's mined copper output faced challenges due to a highwall movement issue at its Kennecott site. Additionally, iron ore production at the Iron Ore Company of Canada was down by 11% after forest fires in July led to site-wide shutdowns and a subsequent reduction in guidance.

The ongoing issue at Kennecott is expected to affect copper production into 2025 and 2026. Moreover, Rio Tinto anticipates the Pilbara iron ore unit cash costs to be at the higher end of its forecast range due to rising inflation. These factors are anticipated to impact market sentiment towards the company.

Despite these operational challenges, CFRA believes the upcoming ramp-up of the Oyu Tolgoi mine will bolster copper production. The firm also highlighted Rio Tinto's robust balance sheet and attractive dividend as positive factors. As a result of the recent updates, CFRA has adjusted its earnings per share (EPS) forecasts to $6.85 from $6.90 for 2024, and to $7.05 from $7.55 for 2025.

In other recent news, Abbott Laboratories (NYSE:ABT) has raised its full-year profit outlook following robust third-quarter sales, primarily driven by its medical devices such as the FreeStyle Libre glucose monitor. The company's medical devices unit reported sales of $4.75 billion, surpassing analysts' average estimate of $4.68 billion. Sales for the glucose monitors climbed to $1.6 billion, marking a near 21% increase from the previous year. Abbott's adjusted quarterly profit was $1.21 per share, slightly above the estimated $1.20 per share.

Citi maintained a Buy rating on Abbott, following updates on the company's Pulse Field Ablation (PFA) portfolio. The anticipated regulatory clearance and trial commencements contribute to the positive stance. JPMorgan has also raised its price target for Abbott's shares to $135, anticipating strong third-quarter 2024 earnings. The firm forecasts sales of $10.54 billion for Abbott, driven by healthy volumes and pricing benefits, particularly in the Diabetes and Electrophysiology segments.

Oppenheimer initiated coverage with an Outperform rating on Abbott Laboratories, highlighting the potential for the company to overcome current obstacles and achieve stronger financial health in the coming years. TD Cowen reaffirmed its Buy rating on Abbott, based on the expectation that the company's third-quarter results will meet or surpass the current market predictions. These are the recent developments for Abbott Laboratories.

InvestingPro Insights

To complement the analysis of Rio Tinto's recent performance and CFRA's rating, let's look at some additional insights from InvestingPro for Abbott Laboratories (ABT), another major player in a different sector.

Abbott Laboratories, a prominent player in the Healthcare Equipment & Supplies industry, has shown resilience in its financial performance. According to InvestingPro data, the company's revenue for the last twelve months as of Q2 2024 stood at $40.73 billion, with a modest growth of 1.24%. This steady performance is reflected in the company's market capitalization of $205.38 billion.

InvestingPro Tips highlight Abbott's strong dividend history, having raised its dividend for 11 consecutive years and maintained payments for 54 consecutive years. This commitment to shareholder returns is further evidenced by a current dividend yield of 1.9%. The company's ability to sustain and grow its dividend suggests financial stability, which could be attractive to investors seeking income in addition to potential capital appreciation.

Another noteworthy aspect is Abbott's profitability. The company has been profitable over the last twelve months, with analysts predicting continued profitability this year. This positive outlook is supported by a gross profit margin of 55.47% for the last twelve months as of Q2 2024, indicating strong pricing power and operational efficiency.

It's worth noting that Abbott is trading at a relatively high P/E ratio of 37.13, which may suggest investor confidence in the company's future prospects. However, potential investors should consider this valuation in the context of the company's growth potential and industry position.

For readers interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for Abbott Laboratories, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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