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(Sharecast News) - Analysts at Berenberg cut their price target on Rio Tinto from 8,200p to 8,100p on Thursday, saying higherthanexpected diesel costs in the Pilbara were likely to keep unitcost pressure elevated, while parts of the miner's Q2 production update pointed to downside risks in iron ore.
Berenberg said Rio Tinto's Q2 numbers were a mixed bag, with production guidance left unchanged across commodities, but Pilbara unit costs rising $0.80 per tonne yearonyear in the first half due to elevated diesel prices.
Copper C1 cost guidance was lowered to $0.30 to $0.50 per pund, helped by strong gold prices, while Rio flagged a $1.2bn workingcapital cash outflow tied to rising ironore inventories and a $443m tax outflow in Mongolia.
Copper output of 213,000 tonnes was slightly below Berenberg's forecast, mainly due to a weaker quarter at Kennecott, where a furnace breach caused an unplanned outage, while iron ore was mixed, with Pilbara production and shipments marginally ahead of estimates, but IOC delivering just 2.9mt versus the broker's 4.2mt forecast, creating potential downside to fullyear guidance.
Rio Tinto delivered first lithium tonnes from Fnix 1B and Sal de Vida, but a development decision on the Nemaska Lithium project was pushed to the second half as the review continues.
Berenberg updated its model following the Q2 report, trimming its target price and keeping a 'hold' rating, noting Rio trades at 1.38x net asset value and 5.7x FY26 underlying earnings.
RBC Capital Markets said firsthalf trading at Ashtead Technology was solid, but slightly softer margins linked to ongoing Middle East and Asia disruptions prompted the broker to trim its estimates.
Ashtead expects H126 revenues of 100.2m, broadly in line with the 102m consensus, but activity weakness in the Middle East and APAC pushed adjusted underlying earnings and EBITA margins down to 37.8% and 25.0%, below typical firsthalf levels. Capex was weighted to H1, nudging leverage up to 1.4x, though the group still expects to finish FY26 below 1.0x.
Guidance was left unchanged, with management assuming Middle East operations normalise and expecting singledigit revenue and EBITDA growth for the year.
RBC, which reiterated its 'outperform' rating and 560p price target, trimmed its FY26 numbers to reflect lower contribution from highermargin Middle East work.
The Canadian broker said record backlogs among Ashtead's largest oil and gas customers, scheduled for execution through 2026-29, underpin a sustained period of offshore activity.
Low breakeven economics and large offshore resources should support continued project sanctioning, providing a favourable backdrop for pricing and margin improvement, added RBC
Ashtead trades on a 4.8x FY27 enterprice value/EBITDA ratio, with RBC's 560p target based on a 6.0x multiple in line with wider offshore services peers.
Reporting by Iain Gilbert at Sharecast.com