BHP Group's earnings diversification is attractive, Morgan Stanley believes, although iron ore prices are likely to come under pressure in the second half of 2020 and have an impact.
The balance sheet is also providing further protection and upside potential to the dividend yield. The near-term catalysts are scarce. The broker notes that Jansen, the company's most sizeable growth project, is expected in early FY21 and its project economics are predicated on improving prices.
Equal-weight maintained. Industry view: Attractive. Target is $39.40.
Target price is $39.40.Current Price is $36.83. Difference: $2.57 - (brackets indicate current price is over target). If BHP meets the Morgan Stanley target it will return approximately 7% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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