Rio Tinto gains as iron ore price lifts, Morningstar says shares 'undervalued'
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The news: Rio Tinto shares rallied after the mining giant reported growth in second-quarter production on Wednesday, topping market estimates, and as benchmark iron ore prices climbed to a two-month high.
The numbers: Rio shares were up 1.3% to $111.90 at 3pm AEST. Iron ore rivals BHP (0.3%) and Fortescue (0.1%) saw more modest gains.
Morningstar retained its fair value estimate of $116 per share, noting the stock is around 5% undervalued due to concerns over US tariffs.
The rally followed iron ore rising 1.3% to a two-month high, before paring gains. It last traded 0.5% higher at USD100.70 per tonne.
The context: Morningstar analyst Jon Mills said Rio is on track to meet the low end of its 2025 shipments guidance, marking a modest decline on 2024. However, if recent increases in futures prices are maintained there may be an upside to earnings, he noted.
The sources: Morningstar research, Bloomberg
