---
endpoint: analytics
pattern: Materials
status: done
latency_ms: 186436
conversation_id: 268d64ac-4c85-4a50-aece-4080f967691d
citations: 0
created: 2026-05-31 18:16:18Z
---

# Is CLSA incrementally more positive/negative on BHP. If so, why?

**Yes — CLSA has turned incrementally more positive on BHP** over Feb→May 2025, evidenced by a rating upgrade from HLD to O-PF, a small TP bump, and an upward EPS revision. The positivity is qualified, however: CLSA still prefers Rio Tinto over BHP within the diversified miners. Note that CLSA's archive on BHP in this scope runs through 29 Jun 2025; there is no fresher CLSA view available in the corpus, so "incrementally" is anchored to that window.

## Rating / TP trajectory (lead analyst: Baden Moore, CLSA Sydney)

| Date | Doc | Rating | TP (A$/sh) | Headline |
|---|---|---|---|---|
| 20 Jan 2025 | BHP – A strong 2Q, led by copper | **HLD** | — | 2QFY25 result review |
| 17 Feb 2025 | BHP – In line 1HFY25 financials | **HLD** | — | "We continue to prefer RIO over BHP" [1] |
| 17 Apr 2025 | BHP – A strong 3QFY25 result | **O-PF** | A$39.50 (+9% potential) | "Maintain O-PF" — Escondida copper guidance upgraded [2] |
| 17 Apr 2025 | BHP – A solid 3Q result, led by Cu. | **O-PF** | **A$40.00** (+11% potential) [9] | TP raised from A$39.50 → A$40.00 [5] |
| 7 May 2025 | Global Metals & Mining (Buy gold, RIO & BHP) | **O-PF** (re-affirmed) | A$40.00 | "Diversified miners Rio Tinto and BHP to outperform in 2025" [7] |

The pivot from **HLD → O-PF** occurred between the 17-Feb 1HFY25 review and the 17-Apr 3QFY25 update. EPS was also nudged higher: FY25CL net profit revised +2.7% and FY26CL +1.7% [10], leaving CLSA's FY25/26 EPS 9–10% above VA consensus [10].

## Why CLSA turned more positive

**1. Escondida copper guidance upgrade — the principal swing factor.** BHP raised its medium-term Escondida guidance, with the post-2027 "down dip" view lifted from c.740kt/annum to **900kt–1.0Mt p.a. to 2030**, and now extended to FY31, driven by life extension at Los Colorados [2][4]. CLSA called this "a key positive of the result" and the explicit driver of the upgraded forecasts [2][4].

**2. Operationally stronger MarQ than peers.** 3QFY25 was "broadly stronger vs market expectations", with the copper business **+5% vs VA consensus**, led by Escondida (+7%) and Pampa (+8%); iron ore was in line with consensus and outperformed RIO's IO result (which missed consensus by 4%) [4]. CLSA explicitly stated BHP's MarQ result "outperformed RIO's, in our view" [3].

**3. FY25 guidance held, with several assets at the upper half.** Production at Escondida, Pampa, Samarco and NSWEC was guided to the **upper half of FY25 ranges** [3]; only BMA cost guidance was revised (+11% at the mid-point) due to weather impacts [4][2].

**4. Macro/positioning tailwind.** By 7-May, CLSA explicitly added BHP to the call for ASX Resources outperformance into 2025, alongside the gold producers (NST/EVN/NEM) and RIO, citing (a) downside risk to commodity prices already factored into 2025/26 VA consensus, (b) a long US-China trade negotiation analogy to 2018/19, and (c) RIO and BHP trading at a **historical discount to long-run average multiples**, offering "defensive exposure to an eventual rebound in commodity markets" [7][8].

## The qualifier — RIO remains preferred over BHP

Even after the upgrade, CLSA was explicit that the positivity is *relative, not absolute*. Within the iron-ore diversifieds, RIO is still the higher-conviction call on three grounds [6]:

- **Balance sheet**: DecH'24 RIO payout 64% vs BHP 50% (bottom of policy). BHP's net debt sits in the top half of its US$5–15bn target range, with Samarco cash payouts and rising capex from copper growth keeping pressure on the balance sheet (this was already the principal reason for the Feb HLD call) [1].
- **Capital management optionality**: better at RIO given the stronger balance sheet [6].
- **Commodity mix**: RIO's Cu/Aluminium mix is seen as more leveraged to China stimulus [6].

## Bottom line

CLSA's stance on BHP has moved from "Hold, prefer RIO" (Jan–Feb 2025) to "Outperform, TP A$40, still prefer RIO but expect BHP to outperform the broader ASX Resources sector in 2025" (Apr–May 2025). The trigger was operational (3QFY25 beat) plus structural (Escondida copper guidance lift to 900kt–1Mt p.a. through 2030–FY31). The positivity is constrained by BHP's tighter balance sheet relative to RIO and the bottom-of-policy 50% dividend payout [1][6].

---

**Sources**
[1] BHP – HLD (In line 1HFY25 financials) — CLSA (17 Feb 2025) — 607950918LinqAlpha.PDF
[2] BHP – O-PF (A strong 3QFY25 result) — CLSA (17 Apr 2025) — 607956139LinqAlpha.PDF
[3] BHP – O-PF (A solid 3Q result, led by Cu.) — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF
[4] BHP – O-PF (A solid 3Q result, led by Cu.) — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF
[5] BHP – O-PF (A solid 3Q result, led by Cu.) — TP change to A$40/sh — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF
[6] BHP – O-PF (A solid 3Q result, led by Cu.) — RIO preference rationale — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF
[7] Global Metals & Mining (Buy gold producers, Rio Tinto & BHP) — CLSA (7 May 2025) — 607958391LinqAlpha.PDF
[8] Global Metals & Mining — historical discount / defensive exposure — CLSA (7 May 2025) — 607958391LinqAlpha.PDF
[9] BHP – O-PF (A solid 3Q result, led by Cu.) — Price target table A$40 / +11% — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF
[10] BHP – O-PF (A solid 3Q result, led by Cu.) — financials table, EPS +2.7%/+1.7% revisions — CLSA (17 Apr 2025) — 607956168LinqAlpha.PDF

