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BHP’s Fiscal 1H17 Results: What the Analysts Think

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Nov. 20 2020, Updated 12:51 p.m. ET

BHP’s consensus rating

Of the 21 analysts covering BHP Billiton (BHP), seven analysts have issued “buy” recommendations, while 11 have “hold” recommendations, and three have “sell” recommendations on the stock. The consensus target price for the company is 27.60 Australian dollars, which implies an upside of 4% based on its current market price.

By comparison, mining peers Freeport-McMoRan (FCX), Southern Copper (SCCO), and Teck Resources (TCK) have been assigned mostly “hold” ratings by Wall Street analysts.

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Upgrades and downgrades

Credit Suisse (CS) downgraded BHP from “neutral” to “underperform” on December 7, 2016, and shifted its preference to Rio from BHP in 2017. The broker downgraded its 12-month average iron ore price forecast to $45 per ton, which implied downgrades for BHP.

Citigroup (C), on the other hand, upgraded BHP’s rating from “sell” to “buy” on December 5, 2016. While Citi isn’t bullish about the future prospects of iron ore due to the fundamental rebalancing needed, it has turned bullish on other commodities.

For 2017, Citi has upgraded its iron ore price forecast by 21.6% and its hard coking coal forecast by 58.8%. Citi is positive on the outlook for oil, copper, and zinc in 2017. To reflect its positive stance, it has upgraded its diversified miners, including BHP.

Recent changes

Bernstein Research’s Paul Gait is impressed with BHP’s cost saving efforts. The analyst stated: “In addition to having delivered more revenue, the company has saved more costs than we anticipated, hence the higher differential in EBITDA compared to revenue. The company reported that its unit cost in fiscal 1H17 dropped 10% YoY (year-over-year) in conventional petroleum, 37% at Escondida, 1% at WAIO, and 4% at Queensland coal.”

Following are the recent changes to BHP’s target prices:

  • Independent Research cuts BHP’s target price from 1,550 BP (British pence) to 1,500 BP.
  • UBS raises target price from 1350 BP to 1400 BP.
  • HSBC cuts target price from 1550 BP to 1500 BP.
  • Deutsche raises target price from 1410 BP to 1420 BP.
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