Deutsche Bank has turned bearish on BHP Group (LON:BLT), pointing to a more challenging outlook for the blue-chip miner this year, WebFG News has reported. The comments come ahead of the Anglo-Australian group’s half-year operational review due on January 22.
BHP’s share price has climbed higher in today’s session despite the rating downgrade, and as of 14:41 GMT, was trading 1.41 percent higher at 1,704.80p. The stock is marginally outperforming the broader market rally which has seen the benchmark FTSE 100 index gain 0.90 percent to 6,923.29 points so far today.
Deutsche Bank turns bearish on BHP
Deutsche Bank trimmed its rating on BHP from ‘hold’ to ‘sell’ today, lowering its price target on the shares from 1,820p to 1,550p. WebFG News quoted the analysts as commenting that after outperforming last year, on the back of the successful sale of its US onshore business and improved operational performance in the second half, the major re-rating catalysts for the miner were now behind.
“As sector earnings and cash ﬂows fade in 2019/20 we expect investors to increasingly focus on growth and capital allocation in the years ahead,” the broker elaborated. Deutsche Bank further noted that while the stock’s valuation is not expensive in historical terms, BHP had re-rated versus peers.
“The company is in the process of returning $10.4bn to shareholders but post this return we see stronger cash ﬂow and cash return stories at Rio and Glencore,” the broker concluded.
Other analysts on blue-chip miner
Royal Bank of Canada reaffirmed BHP as a ‘sector performer’ last month, without specifying a price target on the shares. According to MarketBeat, the blue-chip miner currently has a consensus ‘hold’ rating and an average price target of 1,754.06p.