BHP Stocks Update

Submitted by Craig Strzelecki on 11 April, 2007 - 16:49

BHP have a maintained Outperform recommendation and a price target of $34.19 per share from stocks analyst Macquarie Research Equities. The analyst is reviewing production estimates for BHP with weather-related disruptions to their mining operations. Rainfall data thus far points to a moderate impact on mine site production, however that being said it is still too early to suggest the risk has passed. The analyst believes that the rain is more likely to affect the shipping schedule at Port Hedland with two quick cyclones George (8th March) and Jacob (12th March). Due to this stock analyst has assumed a modest 13% decline in QoQ sales volumes. Due to the quick succession of cyclones passing offshore northern Western Australia, the analyst has modelled a minor impact at BHP’s Griffin field. In addition, the analyst have trimmed back March quarter production estimates for Mad Dog in the Gulf of Mexico. Mad Dog was idle for the month of March following cooling water problems. Production restarted in early April and still remains on ramp-up towards capacity rates of 100kbpd. The rehabilitation project was substantially completed in December and with Cannington ramping back towards full production from early 2007, the analyst has marginally lifted the March quarter production estimates, but this is still below capacity. As the asset returns to normalised operating conditions, the stock analyst forecasts a throughput of 3 million tonnes per annum. The analyst have reduced earnings forecasts by less than 0.5% in FY07 and FY08. Any downgrades will be short-lived however, as key base metal markets continue to exceed the analyst's forecasts. Given the improving outlook for the bulk commodities coupled with the turbo-charged boost that nickel is set to deliver, the analyst believes with strong conviction that it is difficult to justify the deep discount that is being applied to BHP's forward earnings estimates.

BHP Billiton Limited is listed on the Australian Stock Exchange (ASX) under stock code BHP. You can view their investor website here. BHP was listed on the ASX on 13 August, 1885. Charles "Chip" Goodyear is the CEO of BHP Billiton and Don Argus the Chairman. BHP Billiton was created through the Dual Listed Companies (DLC) merger of BHP Limited (now BHP Billiton Limited) and Billiton Plc (now BHP Billiton Plc), which was concluded on 29 June 2001. BHP Billiton Limited and BHP Billiton Plc continue to exist as separate companies, but operate on a combined basis as BHP Billiton. The headquarters of BHP Billiton Limited, and the global headquarters of the combined BHP Billiton Group, are located in Melbourne, Australia. BHP Billiton Plc is located in London, United Kingdom. The company is principally involved in minerals exploration, production and processing (particularly coal, iron ore, copper and manganese ore) and hydrocarbon exploration, production and refining. Find out the meaning of the recommendations in this primer. Browse for other stockbroker recommendations. You can use Instalment Warrants to trade BHP. Check your charts and good luck with your share trading!

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