Broker tips: Berkeley, BHP

(Sharecast News) - Analysts at RBC Capital Markets upgraded housebuilder Berkeley from 'sector perform' to 'outperform' on Thursday, noting the group had "acted decisively" to the challenges it had faced. RBC Capital stated that when it had upgraded Berkeley from 'underperform' shortly ahead of the firm's strategic update on 1 April, it had "very quickly looked like the April fool" as it realised it had the wrong rating. "But our mistake was not being too bold, but not being bold enough," it said.

The Canadian bank stated that Berkeley may well hope that market conditions improve, but highlighted that it was planning for them to get worse. "And it is easier to speed things up when markets improve than to slow them down as market conditions worsen," said RBC.

"We upgrade to 'outperform' because we believe that following the estimate reset and share price falls the value proposition is compelling and in our view Berkeley Group is the best placed housebuilder to manage the current worsening market conditions," said RBC Capital, which slightly lowered its target price on the stock from 3,900p to 3,850p.

RBC made no changes to its FY26 estimates, but cut its volumes by 8% in FY27 from 3,820 to 3,500 and by 21% from 4,000 to 3,150 in FY28E. It also modelled 5% build cost inflation in FY27, and then a reduction due to ongoing optimisation strategies and self-help. Overall, its pre-tax profit estimates were unchanged for FY26, but fall by 14% and 32% in FY27 and FY28, respectively.

Over at Berenberg, analysts upgraded mining giant BHP from 'sell' to 'hold' on Thursday, ahead of its third quarter operational update later in April.

Berenberg expects BHP to report "a slightly softer quarter for copper", and pointed to volumes of 477,000 tonnes, down from from 491,000 in the December quarter, principally due to softer grades at Escondida in Chile.

The German bank expects BHP's Western Australia iron ore business to produce 61.2m tonnes, down quarter-on-quarter as a result of weather impacts. It also assumes shipments of the same amount.

"We forecast metallurgical coal volumes of 4.4mt and thermal coal volumes of 3.7mt. We also expect the

company to provide an update on the progress of construction for the Jansen potash project in Canada, which is due to start production in mid-2027," said Berenberg, which lowered its target price from 2,600p to 2,500p.

"We update our model for the price deck and add in opex inflation in 2026 (which we ease in 2028). We think that BHP has a defensive portfolio mix for the current macro backdrop as well as dividend upside catalysts."

Berenberg added that BHP shares were trading at 1.41x net asset value and 6.4x FY27 EBITDA.

Reporting by Iain Gilbert at Sharecast.com