From The Australian:
CLSA upgrades BHP Billiton (BHP) to Buy from Outperform, while lowering its target price to $35 from $38/share.
CLSA analsyt David Radclyffe says each of BHP’s core commodities (iron ore, oil, and copper) is now trading below long run fundamentals and he expects a stabilisation to modest recovery across these core commodities in 2015.
“Despite rebasing for lower oil prices, BHP remains a very robust business with a strong balance sheet and further opportunity for further cost out,” he says. “We expect BHP to fund its progressive dividend which has been a key point of differentiation within the sector. On this basis BHP now offers an attractive franked dividend yield of 5%.”
Mr. Radclyffe notes that the last sustained period BHP traded below 6x EV/EBITDA was during the GFC and dips below that line have been a good buying opportunity in the past.
Another analyst treating structural adjustment as cyclical, and compounding that error by confusing cyclical stocks with income. Income stocks are defensive so that you don’t lose your capital while taking your dividend. In risk-adjusted terms, the BHP dividend is a joke.
Fail.
