From Dumbfax:
Meet the one analyst who’s brave enough to slap a sell recommendation on hallowed blue chip BHP Billiton.
Andrew Hines, Commonwealth Bank’s executive director of natural resources, stands out from the 24 analysts on Bloomberg covering the mining company, putting an “underweight” rating on the stock back in May.
Hines slashed the bank’s price target for the miner on Monday from $23.00 to $20, following the news of the Samarco mine disaster, but the event, around which details are still unclear, was just another blow.
“Unfortunately, this tragic event adds more pressure to a company that was already under significant stress from weak commodity prices,” Hines said on Monday.
Hines removed Samarco from BHP’s earnings forecast until 2019, leading to a downgrade in earnings estimates of between 4 and 6 per cent over the next three years.
Before the disaster, Mr Hines warned in a note last week that if commodity prices stayed where they were until the end of the 2016 financial year, BHP’s earnings could plummet by $US6.5 billion.
“It is sobering to note BHP reported an underlying NPAT [net profit after tax] in FY15 of only US$6.4 billion – so without any cost improvements BHP’s earnings in FY16 would be zero at current commodity prices,” he said.
“The challenge for the BHP board is likely to come in about 12 months’ time. If commodity prices do not recover, then the board may need to decide between maintaining the A credit rating or the progressive dividend,” Hines said in October.
I guess MB is not an “analyst” but if it were it was three years earlier!
