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Investing.com - Morgan Stanley (NYSE:MS) has reduced its price target on BHP Group PLC (NYSE:BHP) to AUD43.50 from AUD44.00 while maintaining an Overweight rating on the mining giant. According to InvestingPro data, BHP, with a market capitalization of $132.8 billion, currently trades at an attractive P/E ratio of 11.7 and offers a solid 3.8% dividend yield, having maintained dividend payments for 46 consecutive years.
The adjustment follows BHP’s quarterly results, which prompted Morgan Stanley to update its earnings model, resulting in a 1.3% reduction in fiscal year 2025 estimated earnings per share to US$2.12.
The investment bank also revised its projections for BHP’s production volumes, costs, and capital expenditure at the Jansen project, leading to further reductions in estimated earnings for fiscal years 2026 and 2027 by 2% and 3.4%, respectively.
These changes have caused Morgan Stanley’s base case valuation for BHP to fall by AUD1.05 per share to AUD45.40, while its bull case valuation decreased by AUD1.20 to AUD63.95 per share.
The firm’s bear case valuation for BHP improved, rising AUD1.30 to AUD27.10 per share, which Morgan Stanley attributed to a better-than-expected cash position for fiscal year 2025.
In other recent news, BHP Billiton (NYSE:BBL) Ltd. concluded fiscal year 2025 with production results that surpassed expectations in copper, iron ore, and coal, leading Citi to reiterate its Buy rating on the stock with a price target of GBP43.00. The company reported net debt of approximately US$13 billion, lower than Citi’s previous estimate of US$14.8 billion, and achieved a price realization for iron ore at 98.2% of the benchmark 62% Fe index. BHP’s Jansen Stage 1 potash project is 68% complete but faces delays and increased costs, with its start-up pushed to mid-2027 and capital expenditure revised to US$7.0-7.4 billion.
Additionally, BHP acquired a 50% stake in Argentina’s Vicuna copper project for $2 billion, prompting JPMorgan to maintain its Overweight rating and a price target of GBP46.00. The Vicuna project, comprising the Filo del Sol and Josemaria ore bodies, is projected to require significant investment, with BHP’s share of capital expenditure estimated at $8.5 billion over the next decade. JPMorgan forecasts a $7 billion Phase 1 development at Josemaria, with first production expected in 2032, and a $3 billion leaching operation at Filo del Sol. These developments signal a substantial copper growth opportunity for BHP, although the company’s annual group capital expenditure is expected to remain steady at $11-12 billion.
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