Credit Suisse rates BHP Billiton 'outperform' with 1050p target price

BHP Billiton has been rated as 'outperform' with a target price of 1050p by Credit Suisse as it said the company's investment case still holds after the Samarco disaster.

"BHP Billiton's oil business is setting it apart from the sector peer group and the company recently outlined positive FY17 cost and volume guidance," Credit Suisse said.

Samarco Mineração SA -- a joint venture between BHP Billiton and Vale SA -- was held accountable for a November 2015 dam burst in Brazil that left 19 people dead and the town of Bento Rodrigues destroyed.

"While a significant and upmost serious issue, we do not think Samarco has the potential to undermine our overall positive view of the shares at this stage," said Credit Suisse, noting it awaited release of the more detailed full investigation into the tragedy.

"In our view, the incremental implications of this report are probably limited for BHP Billiton (but not positive), and we await release of the more detailed full investigation."

The brokerage said its modelling allowed for $1.0bn in cash outflows for BHP Billiton in coming years relating to Samarco over coming years, meaning this should cover $2bn in total expenses should the Samarco JV company not have sufficient cash available.

It added that with the full investigation into the causes of the disaster still not completed and released, it might be a "little premature to think that Samarco should be restarting operations anytime soon."

Credit Suisse added that BHP Billiton was well-funded.

"Under spot oil, iron ore and copper prices, and within the dividend and capital expenditure guidance, BHP Billiton should have $7bn-plus of free cashflow for the year to June-2017."