Liberum upgrades Rio Tinto to 'hold', says bad news priced in

Liberum upgraded Rio Tinto to ‘hold’ from ‘sell’ on Tuesday as it argued that bad news was now priced in.

"We upgrade Rio Tinto, as much of the near-term iron price downside risk has been realised (stocking pricing in $90/t iron ore) with the possibility of a seasonal uptick in Q1," the broker said.

"We still struggle to build a sustainable bull case for Rio Tinto from current levels, as iron ore still has further downside risk over the medium term. For now though, the risks appear more balanced - certainly versus BHP."

Liberum noted that Rio shares have underperformed since the company outlined the cost of going ‘green’ at its investor seminar, at $7.5bn between 2022-30.

In a broader note on the mining sector, Liberum said its most preferred stocks are Anglo American, Ferrexpo, Thungela, Shanta Gold and Gemfields. Least preferred are BHP, Centamin and Taseko Mines.