Jefferies Upgrades BHP Billiton to Buy (BBL) (BHP)
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(Updated - August 23, 2016 9:24 AM EDT)
Jefferies upgraded BHP Billiton (NYSE: BBL) from Hold to Buy with a price target of $33. Analyst Christopher LaFemina highlighted fundamental improvements in mining and company-specific factors.
"We had been cautious on the miners due to weak demand, ongoing supply growth, stretched balance sheets, and a lack of FCF for most mining companies. However, demand has stabilized, supply is declining in most cases, balance sheets have strengthened due to FCF and asset sales, and valuations are inexpensive. Fundamentals have clearly improved. For some miners (BHP and FMG in particular), company-specific factors are helping as well," said LaFemina.
"We upgrade BHP ('18 EV/EBITDA of 5.0x, FCF yield of 9.5%) from Hold to Buy on valuation, commodity exposure (iron ore lump and met coal), and better than expected free cash flow growth potential," added the analsyt.
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