MARKET TALK: BHP Cut To Neutral, FY11 Earnings Cut 16% By CS

19th Jul 2010 00:07

2307 GMT [Dow Jones] STOCK CALL: Falls in iron ore and copper, weakening AUD/USD, mean BHP Billiton (BHP.AU) rating lowered to Neutral from Outperform by Credit Suisse, though target price steady on A$45 vs yesterday's A$37.75 close. Earnings forecast down 4% in FY10, 16% FY11, 12.5% FY12 due to falls in commodity prices and AUD/USD, plus other negative catalysts: tougher regulation in Gulf of Mexico post-Deepwater Horizon, European competition rejection of Pilbara JV, and exposure to weakening spot iron ore prices, all cited. Even so, BHP is "best defensive materials exposure" in event of double-dip thanks to strong balance sheet, diversified profile, although Rio Tinto (RIO.AU) is preferred. 4Q production report due tomorrow. ([email protected]) Contact us in Singapore. 65 64154 140; [email protected] (END) Dow Jones Newswires July 19, 2010 19:07 ET (23:07 GMT)