Shares in mining and resources giant Rio Tinto Limited (ASX: RIO) are up from the open today and now trade at $107.19 apiece, 0.41% higher than yesterday's close.
Rio shares dropped dramatically in early March, alongside the wider sector, amid global supply concerns on commodity markets.
Not only that, but investors don't appear galvanised by the company's latest acquisition of Turquoise Hill. The proposed acquisition will raise the company's stake in the Oyu Tolgoi copper operation in Mongolia to 66%.
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Is Rio a buy now? Here's what analysts say
Analysts at Barrenjoey Markets are still neutral on the miner following the update, despite the broker noting Rio got a good discount on the deal.
"We value Oyu Tolgoi at US$15.6 billion at an LT copper price of US$3.75/lb, which implies RIO is paying US$3.10/lb LT," it said.
"On face value, this seems a good deal for RIO shareholders, but we note there remains both technical development risk (will the block cave work?), financial risk (increased capex) and longer-term sovereign risk may still exist," it added.
Meanwhile, analysts at Morgan Stanley were more constructive on the move. They laid out several points regarding the deal in a recent note.
The broker says the project has been somewhat de-risked following agreements with the Mongolian government. This contrasts with recent regulatory developments in Chile that have made acquiring copper assets more difficult. The broker believes the agreements with the Mongolian government are "tilting the odds in favour of an asset with which the company is already familiar".
It also says the underground project is at an inflection point and will benefit from the reshuffle, whilst offering Rio a number of "culture/governance/sustainability objectives at Oyu Tolgoi".
Morgan Stanley rates the mining giant as a buy and values Rio at $122.5 per share.
That's well behind Macquarie's valuation of $140 per share, however. Macquarie's analysts also chimed in on the transaction and said that if Rio buys the rest of the operation "it would boost group copper production by 10% over the next five years and 17% on average for the next 10 years".
Credit Suisse also has Rio set to outperform at $130 per share, joined by Goldman Sachs which is urging its clients to buy Rio at a $131.50 price target.
Jefferies, Bernstein, and Morgans are each neutral on the stock.
According to Bloomberg, 41% of analysts have Rio as a buy right now whereas 47% have it as a hold, and roughly 12% say sell.
Rio Tinto share price summary
In the last 12 months, the Rio Tinto share price has fallen more than 5% into the red. However, this year to date, it has regained strengths and is up 7% in the green.
But gains have weakened lately and it is now 10% in the red over the past month, as shown in the chart below.
