OUR QUEST IS NOT TO BE BULLISH OR BEARISH, BUT TO CORRECTLY ASSESS FUTURE TRENDS

UBS rates BHP as Neutral

UBS suggests incoming BHP Group CEO Brandon Craig will inherit a streamlined portfolio. He is expected to focus on organic growth in copper and potash while maintaining operational discipline.

The broker forecasts attributable copper production will rise to 2.0Mt by FY35 from around 1.4Mt in FY26, driven by projects including Escondida, Copper SA and Jansen.

While management views metallurgical coal as core, UBS highlights investor concerns over Queensland's royalty settings and the need for continued investment.

Neutral rating and $60 target retained.

Macquarie rates SIG as Outperform

Sigma Healthcare has confirmed preliminary discussions regarding a potential acquisition of Boots UK, following media reports suggesting an enterprise value of around $14bn.

This implied valuation appears above most global peers, Macquarie believes. It's felt the attractiveness of any transaction will depend on Sigma's ability to unlock additional value.

This extra value could derive from operational improvements, business structure changes and leveraging Chemist Warehouse's retail model, the analyst explains.

While acknowledging investor concerns around a large offshore acquisition, the broker remains positive on Sigma's domestic earnings outlook, supported by Health & Beauty growth trends and operating leverage.

Unchanged Outperform rating and $3.50 target.

Citi rates WES as Sell

At the Wesfarmers Investor Update, Citi notes Bunnings has continued to gain market share from Woolworths Group ((WOW)) and Coles Group ((COL)) across the household and pets sectors.

Expansion into auto is also flagged as potentially pressuring Super Cheap Auto ((SUL)).

Management is also expanding into branded white goods over the next year, which could affect both Harvey Norman ((HVN)) and JB Hi-Fi ((JBH)), although the market positioning is likely to be in the value segment.

Officeworks is expanding into smart home, wearables and gaming, while Kmart is launching the K Home concept, which is expected to impact Ikea.

The analyst believes earnings growth over the next five years will be generated from lower quality, lower multiple businesses, and this is expected to de-rate the relative multiple for the stock.

The sales base is also emphasised as becoming more cyclical through housing exposure and could be adversely impacted by a worsening housing market. Sell rated with a $69 target.