Rio Tinto: UBS maintains 'buy' ahead of cash returns

(CercleFinance.com) - UBS maintains its "buy" rating on global mining group Rio Tinto, with target price of 4,600 pence, wondering what the market is really concerned about.


In a note to clients, the broker says that two key issues currently stand out, with the most important being the outlook for iron ore prices, closely followed by US/China trade tensions.

However, UBS notes that the iron ore price is expected to be resilient, adding that Rio Tinto's cash returns should also be a key driver for the stock.

As such, the broker expects Rio to return between 8 billion and 13 billion dollars to shareholders over the next 12 months, or 10%-15% of its market cap.

"We expect this cash return strategy to support the stock and drive outperformance despite increasing macro uncertainty," it writes in the note.

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