Rio Tinto Downgraded to Sell

Zacks Investment Research downgraded Rio Tinto Plc. (RIO) to a Zacks Rank #4 (Sell) on May 17 on a sequentially weak production status for the first quarter of 2013, despite reporting better production than the first quarter of 2012.

This mineral resources company has witnessed sharp downward estimate revisions after releasing its first quarter 2013 production data. Though production of iron ore, aluminium and bauxite increased year over year, Rio Tinto experienced a decline in the production of products like alumina, diamonds and gold.

In the reported quarter, Rio Tinto experienced a major wall slide at the Kennecott Utah Copper’s Bingham Canyon Mine, which has turned out to be a major hindrance to its future production expectations. In view of the disaster, Rio reduced the mine’s expected mined copper production by 125,000 tonnes to 540,000 tonnes for 2013. Likewise, the expected production for refined copper was also reduced by 100,000 tonnes to 205,000 tonnes in 2013.

The Zacks Consensus Estimate for 2013 decreased 0.5% to $5.66 per share over the last 30 days, due to a downward revision of around 50.0% of the estimates. For 2014 roughly 75.0% of the estimates were revised downward over the same timeframe, lowering the Zacks Consensus Estimate by 4.2% to $5.66 per share.