BHP – UBS rates the stock as Neutral

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The company has presented a 10-20 year vision, acknowledging the world is changing and that BHP Group needs to change as well. The company envisages electrification and decarbonisation the two dominant themes evolving over the medium-long-term.

Iron ore and metallurgical coal could experience challenged growth rates from scrap, while thermal coal will be challenged by alternative energy sources. BHP will put little capital and new capacity into iron ore and coal beyond productivity tonnage and would like to add more nickel sulphide resources to its portfolio.

However, the company considers abundant supply of lithium renders the industry unattractive despite the demand for batteries. UBS maintains a Neutral rating and, on raising forecasts for iron ore prices, lifts the target to $37 from $36.

Sector: Materials.

Target price is $37.00.Current Price is $37.55. Difference: ($0.55) – (brackets indicate current price is over target). If BHP meets the UBS target it will return approximately -1% (excluding dividends, fees and charges – negative figures indicate an expected loss).

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