Citigroup said that Rio Tinto’s growth projects will come back onto the agenda now that the miner has pulled out of the Chinalco deal and confirmed a rights issue. to reduce its debt burden. The broker notes that dilution from the cash call will be less than if the Chinalco deal went ahead, and maintained its “buy” recommendation.
THOMAS COOK GROUP
Goldman Sachs removed travel operator Thomas Cook from its “sell” list and added it to “neutral” because it is undervalued. The broker’s estimates have risen due to better-than-expected trading, but its 2009 net debt estimate is up to £200m. Goldman raised its six-month price target to 240p.
Wolseley has delivered on its exit from the US Stock business, said Royal Bank of Scotland, and has raised £1bn of equity. However, the broker remains concerned that operational gearing will undermine profitability and jeopardise long-term value-based support for the share price. RBS resumed coverage with a “sell”.