Barclays on Tuesday downgraded Rio Tinto plc from "overweight" to "equal weight" and reduced its price target to 6,600p from 6,885p. The brokerage said the new target equates to about 8% downside relative to Rio Tinto's Feb. 23 closing price of 7,162p.
The analysts cited a combination of valuation tightening and what they assess as weaker near-term conditions in the iron ore market. Barclays noted that iron ore prices appear to be close to their seasonal peak, observing that seasonality typically drives prices to decline progressively until the fourth quarter. On that basis, the firm warned that Rio Tinto's earnings momentum is likely to moderate from current levels.
Barclays pointed out that Rio Tinto has markedly outperformed key peer BHP since the start of the fourth quarter, a move that has left the two companies at parity on an EV/EBITDA metric. The brokerage observed that Rio Tinto is now trading at the tightest valuation discount to BHP seen since 2020.
On copper, Barclays described Rio Tinto's long-term positioning as constrained. The report says the company's recent engagement with Glencore highlighted a lack of clear copper growth options after 2030, a shortfall the analysts judged "not easily solved other than via M&A."
Barclays also assessed the prospects for asset sales and concluded that near-term opportunities are limited. The bank reiterated Rio Tinto's targeted $5 billion to $10 billion potential divestment range but cautioned that achieving those disposals is likely to take time. Barclays calculated that proceeds at the upper end of that range would amount to 456p, representing an 8% net present value upside on a gross basis.
The brokerage further noted that CEO Simon Trott does not see merit in separating the iron ore business from the rest of the group to unlock value, and cited the company's view that the diversified model remains the best way to generate value through the cycle.
Barclays also highlighted a marked deterioration in performance metrics reported for FY25. It said RTIT's EBITDA margins fell sharply to 4.4% in the second half of 2025, down from a 29.5% average over 2018-24, while free cash flow declined to $59 million. By contrast, Borates showed greater resilience, with a 25.8% margin for the full year and $102 million in free cash flow. Book values were reported as unchanged at $3.3 billion for RTIT and $438 million for Borates.
Following the FY25 results, Barclays trimmed its forecasts. The brokerage cut its 2027 EBITDA forecast by 2% and lowered EPS by 1% for 2026 and by 4% for 2027. It also reduced its net present value estimate by 6%, citing higher rehabilitation provisions and minority interests as of December 2025.
Finally, Barclays said it continues to prefer other miners in its coverage, keeping Anglo American plc and Glencore on an "overweight" rating.
Impacted sectors - Mining and materials, base metals, commodity markets and mining equities are the most directly affected by Barclays' reassessment.