Commodities & Metals

Analyst Sees Sunny Days Ahead for Rio Tinto and Mining Sector

Shares of London-based mining company Rio Tinto PLC (NYSE: RIO) got a boost in premarket trading in the U.S. Monday after an analyst upgrade of the mining sector that also helped lift stocks in European trading.

J.P. Morgan upgraded the European Metals & Mining sector to Overweight from Underweight Monday. The analysts said they expect the second half of 2014 to “see the sector’s free-cash-flow improvement, capital-returns potential and attractive relative valuation begin to be appreciated more fully.”

The firm also selected Rio Tinto as its top pick in the sector and added the stock to its European Analyst Focus List. Its rating on the stock remains at Overweight. The analysts expect that Rio Tinto will see free cash improvement in the second half of 2014 as well.

Late last week, Rio Tinto CEO Sam Walsh said that the company’s miner’s business improvement program was gaining momentum. 24.7 Wall St. speculated last month that Rio Tinto might follow in the wake of competitor BHP Billiton Ltd. (NYSE: BHP) and shed underperforming assets. And the company did in fact surrender its stake in an Alaskan gold mine.

Analysts have a mean target of $62.18 on Rio Tinto, and shares ended last week at $54.31. The share price was up 3.3% in premarket trading to $55.92. Rio Tinto was also the best performer on the U.K.’s FTSE 100 index Monday.

READ MORE: America’s Most Unusual Public Companies

Sponsored: Find a Qualified Financial Advisor:

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.