Dropping from a prior ‘outperform’ rating the Swiss bank at the same time cuts its price target to 1,450p from 1,500p.
Analyst Carsten Riek, in a note, said that Billiton’s current share is “fair”.
“We still regard BHP’s balance sheet as being robust and see little risk to dividends with FY20E yields at 5%. However, we think yields are no longer attractive enough to serve as a trigger to push the stock price higher,” Riek said.
Among whatever catalysts may be present, the Credit Suisse noted that the ESG – Ethical, Societal and Governance – angle is “starting to play out” in the sector though he suggests more will need to be done at Billiton before it is something that can re-rate the shares.
Riek noted that should BHP sell its Hunter Valley thermal coal assets, in a rumoured US$1.5-1.8bn deal, the miner’s emissions metric could fall by 5%, and a further divestment of its 33% stake in the Cerrejon open pit coal mine (the company is said to be exploring deal options) could see emissions drop by 12% in total.
“However, to make a difference for investors and to justify a re-rating BHP may be required to re-think its metallurgical coal and petroleum business. Such as step could reduce the carbon footprint by >52%,” the analyst added.