Broker snap: Nomura cautious on miners, but BHP and RIo named top picks

29th Apr 2013 09:22

Nomura has kept its cautious view on the European mining sector but has highlighted BHP Billiton and Rio Tinto as its top picks and upgraded its rating for ENRC and Anglo American."We have been neutral//defensive on the sector for some time now, and despite recent falls in the space, our thoughts today still do not make for compelling reading to be overweight the sector," Nomura said in a research note on Monday.The broker said that its cautious stance is underpinned by its weaker view on China versus consensus forecasts."We believe we will see large divergence in the relative performance of the stocks within the sector this year. The higher quality diversified names will likely do relatively well, but all in all, we think we are likely to continue to see a tough environment for the sector, with investor appetite very low for anything mining."Nomura reckons that BHP Billiton, rated 'buy' at a price target of 2,400p, has a high-quality existing asset portfolio and "reliable" growth that consistently delivers.Meanwhile, Rio Tinto ('buy', 3,700p target price) is also said to have a quality asset portfolio and strong internally driven earnings growth with a new found capital discipline.Anglo American has been upgraded from 'reduce' to 'neutral' given its recent falls (1,700p target price unchanged), while ENRC was also raised from 'reduce' to 'neutral' after the announcement that its shareholders hare considering a takeover offer (300p target price unchanged).Antofagasta remains a 'neutral' but its target rice has been cut from 1,250p to 1,200p.BC