Investec upgrades BHP Billiton to 'hold' after South32 spin-off

Investec has upgraded its stance on BHP Billiton from 'sell' to 'hold' following the spin-off of the miner's South32 portfolio this week, as well as recent reduced capital and operating cost guidance.

The broker said the de-merger of non-core aluminium, silver, energy coal, metallurgical coal, nickel and manganese assets has come at an "unfortunate time" for BHP, with many key commodities at prices not seen since 2009.

"The result is that the new 'improved' BHP Billiton is likely to report decade-low earnings in its maiden year," Investec said.

"That said, on our commodity price forecasts, we expect ongoing earnings growth to support the credit rating and the progressive dividend policy."

The broker has lifted its target price for the stock slightly from 1,329p to 1,383p.

The stock was up 1.6% at 1,426.5p by 10:20 on Friday.