By The Associated Press
Citi analyst Heath Jansen upgraded his rating on mining giant Rio Tinto PLC, saying Thursday's company shakeup could help it in the long term.
THE OPINION: Rio Tinto CEO Tom Albanese and Doug Ritchie, another top executive, announced Thursday that they are stepping down immediately. This news came as the U.K. company announced a $14 billion write-down from its aluminum business and a a coal company in Mozambique. Ritchie led that acquisition.
Sam Walsh, head of Rio Tinto's iron ore division, will become CEO of the world's third-largest diversified mining company.Jansen said that the market will likely see the write-downs and management changes negatively in the short term, but he believes the moves will be positive for the stock and the sector in the long term. He said the announcements could significantly realign Rio Tinto with shareholder interests through reduced spending on mergers and acquisitions and lower capital expenditures. The analyst updated his take on its capital allocation and foreign exchange assumptions. As a result, he increased his target price to $64.03 from $52.82 and upgraded his rating on the stock to "Buy" from "Neutral". THE STOCK: Shares or Rio Tinto traded on the New York Stock Exchange slipped 51 cents to $54.52 by early afternoon. They remain at the higher end of their 52-week trading range of $41.59 to $63.18.