Morgan Stanley assesses a weak 3Q operationally for BHP Group. Management lowered met coal production guidance by -8%, while cost guidance increased by 8% to US$122/t due to higher rainfall and suspension of production due to a fatality.

WA iron ore production missed forecasts by the broker and consensus by -3.3% and -1.9%, respectively partly due to heavy rain and ramping-up, note the analysts.

Morgan Stanley suggests a good finish to FY24 is required to meet both iron ore and copper guidance.

The Equal-weight rating and $47 target are maintained. Industry view is Attractive. Rio Tinto ((RIO)) is preferred by the broker because of better growth, a superior balance sheet and an improving operational performance.

Sector: Materials.

Target price is $47.00.Current Price is $45.09. Difference: $1.91 - (brackets indicate current price is over target). If BHP meets the Morgan Stanley target it will return approximately 4% (excluding dividends, fees and charges - negative figures indicate an expected loss).

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