Broker snap: Rio Tinto finds support

6th Aug 2010 11:54

Yesterday's profit from Rio Tinto was a record and better than expected, but the shares aren't trading far from where they were at February's finals, too low for Charles Stanley.The miner made US$5.8bn in the six months to 30 June, up from £2.6bn in the same period last year on sales of $26.8bn compared with $19.5bn in 2009.But analyst Tom Gidley-Kitchin points out that expectations for 2010 revenues have risen 17% and earnings per share by 45% in the last six months, while the FTSE 100 isn't even 4% higher."So Rio, like the rest of the mining sector, has been de-rated a little," he says. "With global prospects probably a little better than in early 2010 - at worst, we are closer to the end of the crisis than we were - we think that provides a measure of support."Gidley-Kitchin keeps his "accumulate" stance, though points out that Charles Stanley's overall view of the sector is that it "may be better to wait for a quarter or more before adding to existing holdings".Consensus expectations for 2010, 2011 and 2012 are for revenues of $53.2bn, $58.1bn and $58.8bn and EBITDA of $25.4bn, $27.7bn and $28.3bn.