Credit Suisse is pumping the breaks on BHP Billiton Plc (LON:BHP), downgrading to ‘neutral’, as it cautions that the mining major is “missing real catalysts”.
Dropping from a prior ‘outperform’ rating the Swiss bank at the same time cuts its price target to 1,450p from 1,500p.
Analyst Carsten Riek, in a note, said that Billiton’s current share is “fair”.
READ: Decarbonisation trends lead Deutsche Bank to downgrade BHP
“We still regard BHP’s balance sheet as being robust and see little risk to dividends with FY20E yields at 5%. However, we think yields are no longer attractive enough to serve as a trigger to push the stock price higher,” Riek said.
Among whatever catalysts may be present, the Credit Suisse noted that the ESG – Ethical, Societal and Governance – angle is “starting to play out” in the sector though he suggests more will need to be done at Billiton before it is something that can re-rate the shares.
Riek noted that should BHP sell its Hunter Valley thermal coal assets, in a rumoured US$1.5-1.8bn deal, the miner’s emissions metric could fall by 5%, and a further divestment of its 33% stake in the Cerrejon open pit coal mine (the company is said to be exploring deal options) could see emissions drop by 12% in total.
“However, to make a difference for investors and to justify a re-rating BHP may be required to re-think its metallurgical coal and petroleum business. Such as step could reduce the carbon footprint by >52%,” the analyst added.
Elsewhere today, the Credit Suisse mining team also raised its target for Rio Tinto PLC (LON:RTO) to 3,900p from 3,700p whilst sticking to an ‘underperform’ rating.
It rates Glencore PLC (LON:GLEN) as ‘neutral’ and lifted its target price to 180p from 170p, and a 200p target is set for Ferrexpo PLC (LON:FXPO) which is rated as ‘outperform’.