Rio Tinto’s Record Rally Faces Mounting Analyst Skepticism

Shares of mining giant Rio Tinto have been scaling unprecedented heights, yet a wave of caution is emerging from major financial institutions. As the stock price continues its record-breaking run, prominent investment banks are sounding the alarm, downgrading their ratings and prompting investors to question the sustainability of the surge. The central debate is whether the market is overlooking fundamental valuation risks or if the company’s aggressive strategic pivot toward copper and lithium genuinely justifies this explosive performance.

A Strategic Pivot Underpins Growth

Operationally, Rio Tinto is undergoing a significant transformation. Historically reliant on iron ore, the company is now seeing copper evolve into its primary growth engine. The contribution of the red metal to overall profits has doubled to approximately 30%, while dependence on iron ore has decreased from 70% to 60%. A key driver of this shift is the massively expanded Oyu Tolgoi mine in Mongolia, where copper production skyrocketed by over 60%. Under the leadership of new CEO Simon Trott, who assumed the role in August 2025, the company’s strategic focus on materials critical for the global energy transition is expected to intensify further.

Financial Results Present a Mixed Picture

The latest annual figures for 2025 provide ammunition for skeptics. While Rio Tinto managed to increase its underlying earnings (EBITDA) by 9% to $25.4 billion, the bottom-line result told a different story. Net profit declined by 14% to just under $10 billion. This drop is largely attributable to a significant rise in corporate debt. The strategic acquisition of Arcadium Lithium swelled the debt burden from $5.5 billion to $14.4 billion. Management is making a substantial long-term bet on growth in the battery metals sector, but this move comes at the cost of reduced financial flexibility in the near term.

Should investors sell immediately? Or is it worth buying Rio Tinto?

Investment Banks Apply the Brakes

Amid the market celebration, Barclays introduced a note of caution on February 24. The bank’s analysts downgraded Rio Tinto from “Overweight” to “Equal-Weight,” citing the stock’s stretched valuation relative to peers and seasonal risks within the iron ore business. This move followed a similar adjustment by Goldman Sachs, which recently moved its rating to “Neutral.” The consensus among experts is clear: the share price appreciation has become disconnected from fundamental data, and the rally is looking increasingly fragile.

The equity currently trades at €84.55, marking an impressive year-to-date gain of more than 22%. It is precisely this rapid upward trajectory that is amplifying the warning calls from analysts.

Dividend Policy Remains a Key Focus

For current shareholders, attention now turns to March 5, 2026, the ex-dividend date for the stock. The company is maintaining its generous distribution policy with a final dividend of 254 US cents. The coming weeks will reveal whether the operational strength in copper can permanently alleviate concerns regarding the stock’s valuation and its enlarged debt load.