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Investing.com - BMO Capital Markets downgraded BHP (NYSE:BHP) (BHP:LN) from Outperform to Market Perform on Monday, maintaining its price target of GBP20.00.
The rating change comes as BHP’s share price has recently risen to BMO’s target price, supported by improving sentiment in the mining sector, particularly with iron ore prices climbing above US$100 per ton.
BMO Capital’s decision also follows a review of its assumptions for BHP’s Jansen potash project, which has experienced announced delays and capital expenditure increases.
The investment firm noted that BHP’s valuation metrics now appear less compelling, with free cash flow yields falling below average for the sector.
BHP’s EV/EBITDA ratio of 5.9/6.6x is now in line with industry peers, further supporting BMO’s decision to adjust the rating while maintaining its GBP20.00 price target.
In other recent news, BHP Billiton (NYSE:BBL) Ltd. reported fourth-quarter fiscal year 2025 results that surpassed expectations, with fiscal year 2026 guidance aligning with market consensus. The company also concluded fiscal year 2025 with stronger-than-expected production in copper, iron ore, and coal, and guided net debt to approximately $13 billion, which is lower than previous estimates. Despite this strong performance, Macquarie downgraded BHP’s stock rating from Outperform to Neutral, citing concerns over the Jansen project. Meanwhile, Morgan Stanley (NYSE:MS) adjusted its earnings model for BHP, resulting in a 1.3% reduction in fiscal year 2025 estimated earnings per share to $2.12, and lowered its price target to AUD43.50 while maintaining an Overweight rating.
Citi, on the other hand, reiterated a Buy rating on BHP with a price target of GBP43.00, acknowledging the company’s robust production results. JPMorgan maintained an Overweight rating with a GBP46.00 price target after BHP’s acquisition of a 50% stake in the Vicuna copper project in Argentina for $2 billion. This acquisition is based on updated resource estimates, with projections for significant copper production in the future. These developments reflect varied analyst responses to BHP’s recent financial and strategic activities.
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