Is there any value left in the Rio Tinto share price?

The mining giant and its share price has been in focus this week.

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Key points

  • Rio Tinto’s Q3 update revealed a 6% rise in iron ore shipments and an 11% dip in copper production, with annual copper output up 9%.
  • Surging prices in iron ore and copper have boosted investor confidence, lifting the share price by 28.18% over the past four months.
  • Analysts are mixed on Rio’s future; some flag potential downsides with concerns over stretched resources and operational efficiency improvements.

The Rio Tinto Ltd (ASX: RIO) share price has been in focus this week.

The mining giant turned heads when it released its third-quarter update on Tuesday, which covered the three months to 30 September. Rio Tinto reported a 6% quarter-on-quarter increase in its Pilbara iron ore shipments but an 11% drop in copper production. For the year, copper production was still 9% higher.

Rio Tinto has also benefited from tailwinds following an uptick in its core revenue-earning metals. The iron ore price spiked at US$107.85 per tonne earlier this week and was last trading for US$105.55 per tonne. The price of copper also surged this week. Its latest trading price is US$4.906 per pound.

While iron ore is Rio Tinto's primary income-earning material, the miner has been actively expanding its copper operations.

The boost in commodity prices and quarterly results comes amid concerns about Chinese demand for iron ore, following a pricing dispute between China Mineral Resources Group (CMRG) and BHP Group Ltd (ASX: BHP). 

It's been a big week for the Australian miner, and a boost in investor confidence has helped push Rio Tinto shares higher. At the time of writing on Thursday afternoon, the shares are 0.67% higher and changing hands at $130.56 a piece.

Over the past four months, the share price has jumped 28.18% higher. But thanks to a couple of price dips (in April and again in mid-June), the share price is just 7.96% higher for the year.

The past few months have been a great success story for Rio Tinto shares, but the real question is whether there is room for more.

What next for Rio Tinto shares?

TradingView data shows analysts are split about whether there is any more value left in the Rio Tinto share price.

Out of 15 analysts, 7 have a buy or strong buy rating, 7 have a hold rating, and 1 has a sell rating on the shares. The average target price is $127.92, which represents a 1.77% downside from the share price at the time of writing. The maximum target price is $150.73, which represents a potential 15.97% upside.

The team at Morgans downgraded their outlook on Rio Tinto shares to a trim rating earlier today. The broker cited concerns that the miner is stretched and needs a very strong finish for the year in order to achieve its guidance. It lowered its outlook on the shares to a trim rating with a $117.00 price target. 

Macquarie analysts are also unsure about the stock. In a note to investors yesterday, the broker confirmed its neutral rating on the shares and a $115.00 price target. While Macquarie was happy with Rio Tinto's latest quarterly update, it said all eyes are focused on the company's capital markets day and news about how it will "reinforce a simplified operating model and reduce costs".

Morgans and Macquarie estimates represent potential downsides of 10.4% and 11.9%, respectively.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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