Is it irrelevant, or will the Upgrade make the BHP Billiton share price more attractive?

• The chart shows the BHP share price since March 2017.
• Goldman Sachs initiated coverage of BHP at Buy, setting the target price at 2000p.
• Consensus summary: 8 Buys, 19 Holds, 2 Sell; Average target: 1755.89p (Source: Bloomberg).
• Current share price 1517.2p (at time of writing).
• 27 Nov: BHP identifies potential new iron oxide, copper and gold deposit near its existing Olympic Dam operation in South Australia.
• 1 Nov: company announced it will return $10.4bn to shareholders, half of which stock buyback (only Australian-listed shares) and half special dividend.
• Shares -16.9% from 2018 highs; +11.1% from 2018 lows; flat year-to date
• Source: Bloomberg, FT, Reuters, DJ Newswires

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Trading BHP – An Example

Let’s say you think that BHP shares have upside potential as result of this broker upgrade. You decide to buy exposure to £10,000 worth of BHP using a CFD, at the current price of 1517.2p. To do this, you need £2,000.

For the purpose of this example, let’s assume the BHP share price rises to 1709p October high (+12.6%). Your profit would be £1260 from your initial investment of £2,000.

Conversely, let’s assume you open the above position, and place a stop-loss at 5% from the current price. BHP shares continue their downtrend, they fall 5% and hit your stop-loss. Your loss would be £500.

This is provided for information purposes only. It should not be taken as a recommendation.