BHP Group PLC (LON:BHP) has a “high quality business” underpinning an “attractive dividend” according to analysts at UBS, who upgraded the miner to ‘buy’ from ‘neutral’ alongside a target price cut to 1,700p from 1,800p.
In a note on Wednesday, the Swiss bank said despite an uncertain outlook for commodities due to the impact of coronavirus and global trade tensions, the believed the FTSE 100 firm was “well positioned as it has high quality low-cost assets and a strong balance sheet”.
READ: BHP says business is “resilient” and likely to generate “solid cash flow” in the wake of third quarter production results
UBS also said that they expected BHP’s new chief executive, Mike Henry, who took the helm on 1 January, to “energise the investment case and improve the business operationally”.
Analysts also highlight what they said was BHP’s “top quartile dividend in FTSE”, adding that they believed the payout “can be sustained”.
UBS also expected the company’s results for its 2020 financial year, due on 19 August, to be “robust”.
“In our opinion, the valuation is attractive as BHP should be able to deliver >5% dividend yield even if iron ore prices fall back”, UBS concluded.
BHP’s shares were 0.6% higher at 1,362p in late-morning trading.