With markets in positive territory, mining group BHP Billiton is the leading riser in the FTSE 100 after a couple of positive broker notes.
BHP is currently up 20p at £12.80 after UBS issued a buy note, albeit with a price target lowered from £16.25 to £14.50. The bank said:
We are attracted to BHP Billiton as it has a sustainable dividend yield of more than 6% and offers an option on 1) a recovery in oil/gas & copper prices (as well as iron ore and met-coal); 2) medium-term growth in copper/ oil/ potash; 3) potential for a major oil discovery in Trinidad & Tobago (with more visibility next year).
BHP has a low cost position, strong balance sheet, and operates mostly in OECD countries. It has now largely completed its restructuring after the spin out of South32, with only a few other smaller assets to be exited (Nickel West, International Petroleum, etc.). BHP management is now focused on lowering unit costs/capital expenditure further and delivering superior cash returns through the cycle.
Meanwhile in a note on the sector, Barclays said:
BHP Billiton (overweight) would be our preferred long exposure given sector-leading margins, low beta and a decent operating performance expected. We continue to believe in a stronger second half 2015 for commodity demand overall and would see the current weakness in the sector as a buying opportunity.
Overall the FTSE 100 is up 14.40 points at 6622.99 as investors await further developments in the Greek crisis and the US non-farm payroll numbers later.
AstraZeneca also benefited from a positive broker note, up 43.5p to £41.64 as Berenberg moved from hold to buy:
AstraZeneca has made good progress in its oncology pipeline and there are a number of oncology catalysts expected in the next 12 months which will help margins rebound.
The oncology franchise will grow from a low of $2.8bn this year to $6.9bn by 2023.
AstraZeneca’s growth potential has been undervalued and it will return to double-digit growth beyond 2017.
In the mid-cap index, the biggest riser is pharmaceutical group BTG, up 36p at 677p as Peel Hunt moved from hold to buy. Analyst Dr Paul Cuddon said:
BTG’s shares have now priced in a disappointing first year of sales for [varicose veins treatment] Varithena and a correction in consensus forecasts that had also been overly optimistic in the second year
.of launch. Strong revenue growth is still expected to March 2016 driven by the continued performance of acquisitions, DigiFab and royalties. We now see scope for the shares to outperform this year driven largely by the performance of acquisitions. We also see a rich pipeline of clinical news-flow building in the first half of 2016 that will provide increased confidence in longer term forecasts. There is now 20% upside to our 790p target price, we upgrade to buy.
Halfords has dipped 6p to 530.5p as it appointed Jonny Mason, currently at Scandi Standard, as its new finance director. Analyst Nick Bubb said:
You may think it odd that the new finance director of Halfords comes from a Scandinavian chicken producer (Scandi Standard)…but, Jonny Mason, for it is he, turns out to be a former finance director of the Sainsbury’s UK supermarket business and today’s announcement trumpets that he is “a cycling and car enthusiast”!
