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Investing.com - Berenberg downgraded BHP (NYSE:BBL) (BHP:LN) from Hold to Sell on Thursday, maintaining a price target of GBP17.00, which implies a 16% downside from the stock’s July 23 closing price. According to InvestingPro data, BHP maintains a "GREAT" Financial Health Score of 3.41, with strong fundamentals including a healthy current ratio of 2.47.
The downgrade comes as Berenberg believes BHP’s capital expenditure has moved structurally higher, with several unapproved projects potentially adding further pressure on spending in the medium term.
The research firm highlighted concerns about BHP’s dividend, which it describes as "expensive" and no longer covered by falling free cash flow, creating additional pressure on the mining giant’s net debt position.
Berenberg forecasts BHP’s net debt will rise to over USD20 billion by 2030, exceeding the company’s current USD5-15 billion target range that has been part of its capital allocation policy since 2018.
The firm expects BHP will need to adjust its longstanding "guardrails" by raising its net-debt range to USD10-25 billion, a change Berenberg anticipates will be poorly received by the market. BHP is scheduled to report its fiscal year 2025 results on August 19.
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