The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has been in a horizontal channel of late. This has led investors to believe that the banking giant is now fully valued, trading at the same levels pre-COVID.

At market close on Wednesday, ANZ shares finished up 0.88% at $27.51.

ANZ dethroned as Australia’s fourth largest bank

As the ANZ share price has traversed sideways, Macquarie Group Ltd (ASX: MQG) shares have picked up steam in 2021.

The market now values ANZ out of the big four, with Macquarie surging past in terms of market capitalisation.

At present, ANZ is valued at approximately $76.87 billion, whilst the global investment bank is worth $77.68 billion. This puts it behind leader Commonwealth Bank of Australia (ASX: CBA) with $165.21 billion, National Australia Bank Ltd (ASX: NAB) at $93.21 billion, and Westpac Banking Corp’s (ASX: WBC) $80.01 billion.

The reshuffle could also see Macquarie overtake Westpac, given its market capitalisation is not too far ahead. The third pole position would represent another symbolic change and put the company further in the spotlight.

Notably, Macquarie shares have increased by almost 50% in 2021, zooming past the psychological $200 barrier in late October. On the other hand, ANZ shares have gained a paltry 20% in the same period, recovering from COVID-19 lows.

While Macquarie is a different kettle of fish compared to the other major banks, there is no real direct threat. The company’s primary business is asset management providing investment solutions as opposed to retail banking like its peers.

In addition, Macquarie has been investing heavily in renewable energy as the world moves towards decarbonisation. The global push in targeting net-zero emissions could see the company reap huge rewards for its early-adopter approach.

Nonetheless, ANZ still maintains a dominant position within the retail banking industry servicing millions of customers in Australia and New Zealand.

In its FY21 financial results, the company recorded statutory net profit after tax of $6,162 million. This represented a 72% jump over the prior corresponding period. In contrast, Macquarie achieved $3,015 million for the last financial year.

ANZ share price snapshot

For most of 2021, the ANZ share price has continued to move sideways, registering a 21.45% gain. When factoring in the last 12 months, its shares are actually up less than that, up 20.03%.

On valuation grounds, ANZ presides a market capitalisation of approximately $76.87 billion, with 2.82 billion shares on its books.

The post Own ANZ (ASX:ANZ) shares? Here’s how the bank just got booted out of the big four appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Today, the S&P/ASX 200 Index (ASX: XJO) experienced a fairly mixed performance. At the end of the day, the benchmark index slipped 0.15% lower to 7,399.4 points.

Despite a solid showing by energy shares following further strength in oil prices overnight, the market was unable to creep into positive territory today. Tech shares and industrials were the main laggards on the Aussie market, mirroring the weakness in US tech names last night.

However, the question is: which shares delivered the biggest returns to investors on the ASX today? Here are the ten stocks that rose to the occasion:

Top 10 ASX shares countdown today

Looking at the top 200 listed companies, Lendlease Group (ASX: LLC) was the biggest gainer today. Shares in the international property and infrastructure group gained 3.75% despite there being no new announcements from the company. Find out more about Lendlease Group here.

The next biggest gaining ASX share today was Beach Energy Ltd (ASX: BPT). The oil and gas company rose 3% to $1.29 a share on further strength in oil prices. Uncover the latest Beach Energy details here.

Today’s top 10 biggest gains were made in these ASX shares:

ASX-listed company	Share price	Price change
Lendlease Group (ASX: LLC)	$10.93	3.70%
Beach Energy Ltd (ASX: BPT)	$1.285	2.80%
Santos Ltd (ASX: STO)	$6.91	2.52%
Coronado Global Resources Inc (ASX: CRN)	$1.1725	2.40%
Woodside Petroleum Ltd (ASX: WPL)	$22.96	2.27%
Spark Infrastructure Group (ASX: SKI)	$2.88	2.13%
Whitehaven Coal Ltd (ASX: WHC)	$2.55	2.00%
Link Administration Holdings Ltd (ASX: LNK)	$5.02	1.83%
Liontown Resources Ltd (ASX: LTR)	$1.79	1.71%
Reece Ltd (ASX: REH)	$23.37	1.61%

Our top 10 ASX shares today countdown is a recurring end-of-day summary to ensure you know which companies were making big moves on the day. Check-in at Fool.com.au after the market has closed during weekdays to see which stocks make the countdown.

The post Here are the top 10 ASX shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Link Administration Holdings Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The ASX Ltd (ASX: ASX) share price suffered today after the Australian Securities and Investments Commission (ASIC) concluded its investigation into a market outage in November 2020.

An ASIC review into the malfunction has resulted in the watchdog imposing extra conditions on licences held by ASX.

As of Wednesday’s close, the ASX share price is $93.39. That’s 1.45% lower than it was at the end of Tuesday’s session.

Let’s take a look at the news that drove the operator of the Australian stock market’s share price lower today.

A quick refresher

On 16 November 2020, the Australian stock market was closed after a glitch saw the ASX unable to facilitate trades.

It followed a software upgrade to the entity’s trading system.

As a result of the outage, ASIC began an investigation into ASX. The investigation looked into whether ASX had met its obligations under its Australian market licence.

Additionally, IBM Australia undertook an independent expert review into the ASX Trade software update project. 

IBM found ASX met or exceeded industry practices in most capabilities. However, it also found several factors suggesting the platform was not ready to go live.

ASX share price slumps as ASIC imposes new conditions

The ASX share price spent much of today in the red following news the investments watchdog has added clauses to the company’s licence to operate the Australian stock market on the back of last year’s unplanned outage.

The clauses demand the appointment of an expert to assess whether ASX’s assurance program for the CHESS replacement system – due to be launched in April 2023 – is fit for purpose. They will be identifying any shortfalls and reporting to ASIC.

While the program is ongoing, ASX will also have to seek verification from senior executives and its board about technology project readiness.

Finally, ASX will have to resolve issues that led up to the market outage. To do so, it will appoint an independent expert to assess remediations.

ASX managing director and CEO Dominic Stevens commented on the conditions:

We share the determination of our regulators to continue to strengthen market resilience. The new licence conditions are practical and are aligned with the action ASX is taking to improve the way we operate our business…

ASX is a heavily scrutinised organisation with high standards. While no process can eliminate all possibility of technology incidents, our continuous improvement programs have driven the significant reduction in incidents over the last five years.

The ASX board will also create individual executive accountability with links to remuneration consequences. ASIC stated the company’s executives’ interests must be aligned with remedial actions and the avoidance of further outages.

On today’s news, ASIC chair Joe Longo stated:

ASIC’s actions today are all about ensuring the efficient and effective future operation of Australia’s financial markets infrastructure. ASX and market participants must act to ensure that the market can function at all times, so that vital sources of capital are available to the economy.

The post Here’s why the ASX (ASX:ASX) share price struggled on Wednesday appeared first on The Motley Fool Australia.

More reading

• Own ANZ (ASX:ANZ) shares? Here’s how the bank just got booted out of the big four
• Here are the top 10 ASX shares today
• This fund manager isn’t worried about Redbubble’s (ASX:RBL) copyright concerns
• Why Zoom shares plunged on Tuesday
• These 3 ASX 200 shares are topping the volume charts on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Redbubble Ltd (ASX: RBL) share price has been under pressure for over a month now. The latest bout of pessimism began for the global online marketplace operator following its first-quarter trading update on 14 October. Since then, shares have diminished in value by nearly 24%.

On top of this, the company is partly shrouded in concerns of copyright infringement allegations. Despite the decline in October and the ongoing litigation concerns, one fund manager finds Redbubble ‘compelling’.

Addressing the copyright risk to Redbubble on the ASX

You might have noticed that Redubble is commonly featured in the 10 most shorted ASX shares. For instance, this week the company slotted in at the number three spot with 10.5% of short interest. Yet, EGP Capital — in a contrarian manner — remains a major advocate for the eCommerce giant’s potential.

In the fund manager’s October report, chief investment officer (CIO) Tony Hansen summarised the fund’s perspective on Redbubble. This included an admission of the negative growth for the eCommerce company in the June to September quarter compared to the prior corresponding period.

However, Hansen noted that this should be expected given the comparatively booming period last year. Instead, the CIO suggests that long-term investors look at the company’s gross transaction value (GTV) from 2016 to the present. This shows a marketplace that has grown GTV from $36.6 million to $142 million in the space of five years.

In addition, the fund manager addresses the copyright concerns ASX-listed Redbubble has been facing. While it remains a risk, Hansen explained that Redbubble has repeatedly outlined the protections for designs such as fan art. Furthermore, the company has stated that it has a good working relationship with the likes of Netflix Inc (NASDAQ: NFLX).

Discussing the potential legal risk for Redbubble, Tony Hansen wrote:

Rights ownership is clearly an enormous business risk to RBL, and in simple terms, with nearly 800,000 selling artists regularly uploading new work, there will inevitably be breaches happening every day. RBL will be able to defend such breaches provided they have robust systems in place to prevent breaching materials getting onto the site in the first place, and that swiftly remove offending images/artworks when they are reported in the event they are somehow missed at the time of uploading.

Skin in the game

Tony Hansen backs up the belief in ASX-listed Redbubble with capital. At the end of October, the EGP Concentrated Value Fund held Redbubble as its sixth-largest position. The fund has a 5.2% weighting towards the eCommerce company.

For reference, the only companies with a larger weight in the EGP Capital fund are:

• United Overseas Australia Limited (ASX: UOS)
• Cettire Ltd (ASX: CTT)
• PPK Group Limited (ASX: PPK)
• Li-S Energy Ltd (ASX: LIS); and
• Smartpay Holdings Ltd (ASX: SMP)

Unfortunately for the fund, Redbubble has fallen ~42% on the ASX since the beginning of 2021.

The post This fund manager isn’t worried about Redbubble’s (ASX:RBL) copyright concerns appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Cettire Limited. The Motley Fool Australia has recommended Cettire Limited and Netflix. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened?

Shares of Zoom Video Communications Inc (NASDAQ: ZM) fell 14.7% on Tuesday after the cloud communications leader’s slowing growth troubled analysts and investors.

So what?

Zoom’s revenue jumped 35% year over year to $1.05 billion in its fiscal 2022 third quarter. That marked a significant deceleration from the 54% growth the video-chat company experienced in the second quarter and the staggering 367% growth it delivered in the third quarter of 2021. 

To offset the slowdown, Zoom has placed a point of emphasis on expanding its relationships with larger companies, with tools such as its Zoom Rooms video conference room solutions that make it easier for onsite and offsite employees to communicate.

Zoom had 2,507 customers contributing more than $100,000 in trailing 12-month revenue at the end of the third quarter, up 94% from the same period a year ago. These dynamics can also be seen in its net dollar expansion rate in customers with more than 10 employees, which checked in above 130% for the 11th straight quarter.

All told, Zoom’s adjusted net income increased 14% to $338.4 million, or $1.11 per share.

Now what?

Management expects fourth-quarter revenue of roughly $1.05 billion. That would represent a further deceleration in revenue growth, to 19%. The company also guided for operating income and adjusted per-share profits of approximately $362 million and $1.07.

Multiple investment firms cut their price targets for Zoom’s stock following its third-quarter earnings release and Q4 guidance. For one, Evercore ISI analyst Peter Levine reduced his share price forecast from $255 to $235 on concerns that Zoom’s growth investments will weigh on its profit margins in the coming year. For another, Deutsche Bank analyst Matthew Nikam slashed his stock price estimate from $350 to $280, citing similar concerns.

“While we’re positive on Zoom’s strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability,” Nikam said. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Zoom shares plunged on Tuesday appeared first on The Motley Fool Australia.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Zoom Video Communications. The Motley Fool Australia has recommended Zoom Video Communications. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The S&P/ASX 200 Index (ASX: XJO) is having a pretty bumpy time of it so far this Wednesday. At the time of writing, the ASX 200 is currently up by just 0.3% at 7,413 points after stints in both positive and negative territory over the trading day thus far.

But rather than trying to figure that out, let’s instead check out the ASX 200 shares that are currently topping the ASX trading volume charts so far today, according to investing.com.

3 most active ASX 200 shares by volume this Wednesday

Pilbara Minerals Ltd (ASX: PLS)

Our first ASX 200 share to check out today is the lithium producer Pilbara Minerals. This Wednesday has seen a sizable 12.96 million Pilbara shares trade hands so far. With no news or announcements out of the company, we can probably put this volume down to the volatility Pilbara shares have been exhibiting so far.

After dipping as low as $2.44 a share this morning after open, the Pilbara share price has been playing jump rope with the breakeven line all day. It’s currently at $2.52 a share, returning to the price it was at yesterday’s close. It’s this volatility that is probably behind this elevated trading volume.

Sydney Airport (ASX: SYD)

Sydney Airport is next up, with a hefty 21.22 million shares finding new owners on the ASX boards so far today. There’s not much in the way of news or announcements out of this ASX 200 infrastructure giant today either. The shares are currently down by 0.15% at $8.44.

But Sydney Airport has periodically been one of the highest trading ASX 200 shares ever since its acceptance of the takeover deal lobbed its way last month. At $8.44, Sydney Airport is still trading a good 3.7% or so from the takeover price of $8.75 a share. This could be a factor in this high volume today.

Spark Infrastructure Group (ASX: SKI)

And our final and most traded ASX 200 share of the day thus far goes to the renewables company Spark Infrastructure. Unlike the other two companies mentioned, we have something of a smoking gun as to why a whopping 30.72 million Spark shares have been bought and sold over the day so far.

This morning, the company announced that it has received approval from the Foreign Investment Review Board (FIRB) for the takeover offer put forward by a consortium led by Kohlberg Kravis Roberts and the Ontario Teachers’ Pension Plan earlier this year. The Spark share price is up 1.95% at $2.88 a share so far today. 

The post These 3 ASX 200 shares are topping the volume charts on Wednesday appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in marketplace lender Wisr Ltd (ASX: WZR) are moving southwards at pace, now fetching an intraday low of 23.5 cents.

The Wisr share price has lost ground today as the market responds to its AGM. In the presentation, Wisr outlined several investment highlights.

However, the company hasn’t caught any bids following the release – trading volume today is just 10% of its 4-week average, and shares are 8% down at last check.

What did Wisr announce?

Wisr reiterated its latest earnings update, where loan origination was a record $132 million in Q1 FY22. The company has now grown loan originations consecutively for 21 quarters in a row.

Loan book balance for Wisr Warehouse also surged 239% year on year and reached $451 million. At the time of its Q1 FY22 earnings, total loan originations for Wisr stood at $743 million.

The release also notes that in June 2021, Wisr’s Financial Wellness Platform was 88% more cost effective as a loan acquisition channel compared to direct and broker channels. Across the second half in total, cost efficiency in this domain improved 33%, lowering Wisr’s customer acquisition cost.

Over the longer term, revenue growth was up 280% in FY21 at $27 million, and operating expenditures (OPEX) also grew 43%. Note that Wisr already covered these figures in its FY21 earnings up date in August.

Wisr also had $55.1 million in unrestricted cash and liquid loan assets at the time of its report to ensure it is well capitalised.

Moving forward, Wisr states that it is set to pass its $1 billion loan book milestone in FY22. New milestones will also be set beyond the $1 billion loan book watermark.

It also wants to deliver 1 million customers to its proprietary platform, and potentially launch new products, thereby “creating new revenue streams and new market opportunities”.

Investors have sold Wisr today and the bears have it for now, with shares trending down 25% in the past 3 months.

The S&P/ASX 200 Financials Index (ASX: XFJ) is also down around 4% this past month, indicating weakness in the broad financial sector.

Wisr share price snapshot

The Wisr share price has gained almost 12% in the past 12 months after rallying over 20% this year to date.

Yet in the past month, it has reversed course and is down 14.5%, and has slipped another 2% in this last week.

The post Wisr (ASX:WZR) share price in hiding after AGM today appeared first on The Motley Fool Australia.

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The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Wednesday is proving to be a rough day for the Pinnacle Investment Management Group Ltd (ASX: PNI) share price after the company defrosted its stock this morning.

Pinnacle entered a trading halt yesterday as it underwent a $105 million capital raise. The funds were earmarked to go towards a new acquisition.

Unfortunately, the market reacted poorly to the happenings after the company’s stock was released from its freeze.

At the time of writing, the Pinnacle share price is $16.35, 6.57% lower than it was as of Monday’s close.

Let’s take a closer look at this week’s news from the investment management firm.

Pinnacle share price slides on barrage of news

The Pinnacle share price is suffering despite news the company is acquiring a 25% stake in venture capital and private equity company Fire V Capital.

The investment will cost Pinnacle $65 million. A further $10 million is contingent on a successful second fundraising for Five V’s venture capital strategy.

To cover its cost, the fund has raised $105 million through an institutional placement.

The $30 million remaining after the acquisition will help replenish its balance sheet following its 2019 purchase of 25% of Coolabah Capital Investments.

Under the placement, Pinnacle offered institutional investors the option to purchase Pinnacle shares for $16.70 apiece. That was a 4.6% discount on its share price as of Monday’s close. It was also 7.6% less than its 5-day volume-weighted average price.

Simultaneous to the placement, Pinnacle’s director Adrian Whittingham completed a sell-down of 875,000 Pinnacle shares. The holding was worth approximately $14.6 million at the placement price.

The fund is also planning to undergo a share purchase plan. During the share purchase plan, eligible shareholders will be able to purchase up to $30,000 worth of new Pinnacle shares.

Under the share purchase plan, shares will be offered at the placement price or the 5-day volume-weighted average price of Pinnacle shares up to 15 December, whichever is lower. It will open on 30 November.

As The Motley Fool Australia reported yesterday, Pinnacle also provided the market with an update on its funds under management (FUM) during its trading halt.

As of 31 October, Pinnacle was managing $90.9 billion of funds. Its aggregate affiliate FUM are also more than 30% higher than its average FUM for financial year 2021.

Right now, the Pinnacle share price is 130% higher than it was at the start of 2021.

The post Here’s why the Pinnacle (ASX:PNI) share price is falling 6% on Wednesday appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended PINNACLE FPO. The Motley Fool Australia owns shares of and has recommended PINNACLE FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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History was made on the ASX recently as the seemingly unbreakable cabal of the big four banks was broken.

On Wednesday afternoon, Macquarie Group Ltd (ASX: MQG) had a market capitalisation of $77.68 billion, eclipsing Australia and New Zealand Banking Group Ltd (ASX: ANZ)’s $76.87 billion.

That means ANZ is now the fifth largest bank while Macquarie takes its seat among the big four.

Australian competition authorities have long held the belief that the four majors — ANZ, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) — had such unassailable leads in the market that they would never be allowed to merge or even cooperate.

So how did Macquarie sneak in?

Macquarie shares have skyrocketed this year

A major contributor is that Macquarie shares have climbed up almost 50% so far this year. The stock started January at $140 but traded for $204.59 on Wednesday afternoon.

This has much to do with how most of its business is in investment banking rather than retail — and the market thus treats it as a growth stock.

Meanwhile, it’s been many years since ANZ, Westpac, NAB and CBA shares have been considered anything but value (or income) stocks. This is due to their long-established stranglehold in low-margin consumer banking.

To demonstrate, the ANZ share price is lower now than its highs before the global financial crisis 14 years ago. It’s the same case for NAB stock.

Macquarie is having its cake and eating it too

Ironically for regulators, Marcus Today founder Marcus Padley told Livewire recently Macquarie has relatively little competition in the Australian market.

“In the US, the competition amongst the investment banks is savage. You have a choice. But not in Australia.”

But it’s now starting to also eat into the consumer market that the big four have dominated for so long.

“Their recent foray into the domestic mortgage market, the citadel of the big high-street banks, has grabbed market share and hurt their unimaginative competitors,” Padley said.

“I have a Macquarie mortgage. They are so much better to deal with. They have something quite unique in my personal banking experience — something called customer service. There is nothing they cannot do.”

Making the right bets

According to analysts, Macquarie has also done well to invest in infrastructure and businesses that are on the right side of a world moving to net-zero emissions.

“Macquarie is a ‘picks and shovels’ play on decarbonisation,” Fidelity International portfolio manager Kate Howitt told The Motley Fool this month.

“We know that over the next 25 years, the global economy has to spend at least $100 trillion to decarbonise… Macquarie has just been setting itself to be right at the heart of a huge and growing investment pipeline that the world’s got.”

Macquarie is one of Howitt’s 2 largest holdings.

“They have been focusing their recruitment… on scientists, engineers — if they understand the real nuance of how these new and emerging technologies work, then they’ll be better placed to assist on the financing of that,” she said. 

“So that just has a very, very long runway of growth ahead of them.”

The post Macquarie (ASX:MQG) is now a ‘big four’ bank appeared first on The Motley Fool Australia.

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• After falling 15% in a month, is the Westpac (ASX:WBC) share price good value?
• Is the CBA (ASX:CBA) share price premium relative to other big banks justified?
• 2 ASX dividend shares with attractive yields to buy
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Motley Fool contributor Tony Yoo owns shares of Macquarie Group Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in resources giant Rio Tinto Limited (ASX: RIO) are struggling to find range today. At the time of writing, the Rio Tinto share price is $94.58, after rallying as high as $95.71 and slipping as low as $94.38 in early trade.

Zooming out, Rio shares are swimming in a sea of red across all time frames, even if prices have just bounced from 3-month lows.

Despite this downtrend, analysts are split on the future direction of Rio Tinto’s share price. Let’s take a closer look.

What’s up with Rio Tinto shares lately?

Rio shares have been drifting lower these past few months. The trend began after the mining giant released its 3rd quarter results.

As advised by Rio at the time, it had another difficult quarter after struggles dealing with the pandemic. Ore shipments were barely afloat, growing just 2% for the 12 months. Much of the headwinds came from weakening iron ore prices across 2021.

As Chinese demand for steel’s main ingredient slowed, the price of iron ore rapidly fell from a high of US$229.50/tonne in May to now trade at US$92.50/tonne – a staggering 60% decline.

The results meant Rio also lowered its target output across major commodities such as iron ore, titanium dioxide, bauxite, aluminium and mined copper.

Investors responded poorly to Rio’s quarterly update and sent its share price backtracking where it hit 52-week lows two weeks ago.

Can the Rio Tinto share price climb to $133?

The team at Macquarie seem to think so. Analysts at the firm recently retained their valuation of $133/share and retained an outperform rating on Rio’s share price.

One factor Macquarie highlights in reasoning is Rio’s recent efforts to bump up its ESG framework. This includes a collaboration with US-based nonprofit, Resolve, to re-purpose mining waste from Rio’s legacy mine sites.

The agreement spawns a company called Regeneration, and Rio has already made an equity investment of $2 million. Macquarie also notes Rio’s $87 million investment to build 16 new posts using AP60 technology in Canada as a positive step towards its ESG credentials.

Aside from this, the broker likes Rio’s free cash flow generation, that was spurred on by record iron ore prices achieved in early 2021.

Meanwhile, Citi believes it’s time to revisit the valuations of iron ore shares, especially with Chinese monetary policy and political risks softening. The broker says “with the recent share price corrections, we see value across the Australian iron-ore sector”.

JP Morgan thinks there is “still plenty of valuation support and free cash flow yield in the space” as well, and forecasts a 10% free cash flow yield in fiscal 2022 for Rio. The broker reckons that other commodities, such as coal and copper, will also jump in to offset iron ore weakness.

Or could Rio Tinto fall to $87?

Whilst the teams at these leading brokers are heavily bullish on its direction, others aren’t as optimistic. The team at Jefferies disagree on the valuation front and are cautious on the entire metals/mining space.

It reckons that ASX iron ore shares still aren’t cheap – even with the large pullbacks of late. As such, it retains a hold rating and a $100 share price target.

Investment bank Morgan Stanley also cautioned investors on Rio’s situation in a note released to clients today. It reckons that Rio will take a hit if the Mongolian government gets its way from talks on the Oyu Tolgoi project.

Basically, the Mongolian government wants Rio to cover additional costs and cancel the debt on its 34% share of the Oyu Tolgoi project.

Oyu Tolgoi, in the South Gobi region of Mongolia, is one of the largest known copper and gold deposits in the world, according to Rio. When the underground is complete, it will be the world’s fourth largest copper mine. Rio owns the remaining 66% of Oyu Tolgoi through a company vehicle, Turquoise Hill Resources.

The broker estimates the accumulative burden for Rio to be $700 million if Mongolia’s debt is waived and another $700 million to cover the government’s share of costs if it goes ahead.

Morgan Stanley has a $101 price target on the Rio Tinto share price which it updated yesterday after staying equal weight on its rating.

The lowest price target on the list of analysts covering Rio Tinto is $87 from RBC Capital Markets, whereas Evans and Partners reckon that shares can hit $146. As such, the spread between all valuations is around 68% or $59 per share.

In the past 12 months, the Rio Tinto share price has fallen over 8.5% after sliding another 17% this year to date.

The post Here’s why Macquarie sees 39% upside in the Rio Tinto (ASX:RIO) share price appeared first on The Motley Fool Australia.

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• Fortescue’s push to axe diesel subsidies could cost ASX miners billions
• Why has the Rio Tinto (ASX:RIO) share price fallen in a hole over the past month?
• Top brokers name 3 ASX shares to buy next week

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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