RBC Capital upgrades Anglo American, downgrades BHP

RBC Capital Markets upgraded miner Anglo American on Wednesday, but downgraded its stance on BHP.

The bank lifted Anglo American to ‘outperform’ from ‘sector perform’ but cut the price target to 3,450p from 3,600p

"With the shares having pulled back and platinum group metals prices stabilising, Anglo's diversified and growth-heavy portfolio of assets returns to our outperform list," RBC said.

It said the stock’s valuation is attractive and higher metallurgical coal prices help to offset some of the iron ore price weakness.

"With the balance sheet in good shape, Anglo's portfolio places it in a strong position for the post-iron ore spike world," it added.

RBC downgraded BHP to ‘sector perform’ from ‘outperform’ and slashed the price target to 1,900p from 2,300p. It said that with the property cycle in China turning, BHP's excess cash flows have dissipated.

"The complications and uncertain dynamics of the DLC unification could see the recently accrued premium to the London line at risk," it said. "For global investors we see better options elsewhere and downgrade to sector perform."