Newspaper article The Evening Standard (London, England)

ING Puts the Boot into BHP after Rio Pullout

Newspaper article The Evening Standard (London, England)

ING Puts the Boot into BHP after Rio Pullout

Article excerpt


THE boost to its share price that mining giant BHP Billiton received in return for dropping its [pounds sterling]37 billion offer for rival Rio Tinto may proved shortlived.

That is the view of ING, which has dropped its rating on the shares from buy to hold because of short-term economic conditions. But the broker has raised its 12-month target from 925p to 1025p after seeing the price rally 75p to 1055p yesterday. Today the shares came in for profit-taking, losing 7p at 1044p.

But that compares with the 7078p at which it started the year.

At the same time, ING has raised its rating on Rio, down a further 59p at 1491p, from hold to buy having seen the shares lose almost 40% of their value yesterday after termination of BHP's offer worth around 6000p a share.

The broker has lowered its target from 2200p to 2000p and points to Rio's staggering $39 billion of debt, which compares with just $6.3 billion for BHP. It warns that without any disposals next year, Rio's leverage will continue to deteriorate, but the group needs to refinance around $9 billion of the Alcan acquisition facility next October.

JPMorgan has cut its target for Imperial Tobacco from 2550p to 2450p and reduced its earnings estimate for 2009 following yesterday's full-year results.

It blames the move on negative currency movements and their impact on the group's debt position. It continues to rate the shares overweight.

The market generally slammed into reverse following the gains of the past few days. In another day of thin trading, the FTSE 100 index fell 61.5 to 4109.6.

Dealers pointed out the continuing bear squeeze and absence of stock generally means the equity market is capable of turning on a sixpence. Falls among second-liners were restricted with the FTSE 250 losing 35.47 at 5797.52.

Results from caterer Compass Group got the thumb-sup and the shares responded with a rise of 123/4p at 2701/4p. …

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