Broker snap: UBS names Rio Tinto as top pick among miners

17th Jan 2014 09:17

UBS has kept a 'buy' rating for mining giant Rio Tinto, saying that the stock remains its top pick in the sector on the back of its volume growth, cost cutting and cash-flow.The bank has made small upwards revisions to estimates after Rio's fourth-quarter operations statement on Thursday and has lifted its target price for the shares from 4,040p to 4,050p."Rio Tinto continues to be our most preferred stock; its strong production report gives us confidence in our 15% iron ore volume growth forecast next year, which together with continued focus on cost cutting should facilitate significant earnings growth," UBS said.The bank labelled Rio's fourth-quarter output as "again robust" with production ahead of guidance across all commodity classes except uranium and semi-soft coking coal."While we don't expect a buyback from Rio in 2014e given its focus on reducing debt, we do expect a lift in the final dividend such that we are forecasting a 2013 dividend of US$1.80 per share (+8% year-on-year) with upside risk."The stock was 2.02% higher at 3,402p by 10:36 on Friday.BC