Cost concerns for Rio Tinto

Morgan Stanley has published a note on Rio Tinto, following the miner's Capital market Day. The investment bank rates the stock 'equal-weight', with a $129.50 target price.

The stock has just reached a record high of around $140 on stronger copper prices, but the bank warns of higher capex in FY27, before being reduced due to lower decarbonisation spending.

Morgan Stanley says the Capital Market Day was slightly below expectations which may lead to some rotation into BHP.

Another investment bank, Barclays, says that 2026 production guidance came in 3% below consensus. It sees near-term headwinds for Rio Tinto, but Barclays is more optimistic for the 2030 horizon thanks to Rio's cost-cutting program.

Turning to other analyses... Morningstar has released a list of "stocks with room to run", which includes ResMed, Aristocrat and Steadfast.

The investment research firm argues that ResMed is a market leader in the majority of countries it operates in, and says on top of that, the addressable market remains consequent, notably with emerging countries.

Equity analyst Lochlan Halloway says ResMed is undervalued, just like Aristocrat Leisure.

In the case of Aristocrat, Morningstar says its economic moat is wide thanks to "relentless R&D investment". It also sees growth potential in online casino and notes a high level of return on capital.

Elsewhere... brokers are mixed on Bendigo and Adelaide Bank after the RACQ deal.

The regional lender agreed on Thursday to buy the retail lending assets and deposits of RACQ Bank.

Jefferies says that while the deal is expected to be modestly accretive for returns, it comes at a time when management focus is likely to be drawn to its anti-money laundering issues. The broker retains its "underperform" tag, with a $9.53 price target.

Meanwhile Morningstar has kept its fair value estimate unchanged at $11 per share, saying the acquisition increases loan and deposit forecasts.