bhp price traget 16, page-32

A bullish view: http://www.businessday.com.au/business/cheap-resources-stocks-a-tempting-target-for-the-brave-20120525-1zabt.html

Analysts at Deutsche Bank this week ran a pessimistic macroeconomic scenario through their models and found that some resources stocks were not only trading below their current fair value, but were trading below what their fair market price would be in a significantly weaker economic environment.

Assuming commodity prices fall well below current levels for a sustained period, and growth projects don't go ahead, Deutsche found the recent market punishment had been particularly harsh on Rio Tinto, BHP and uranium miner Paladin Energy.

Deutsche found Rio shares were today worth 30 per cent less than net present value would be under the pessimistic scenario, while BHP's current share price was 13 per cent less.

''Although there is likely one or two quarters of earnings downgrades ahead, value has emerged and some stocks do appear oversold,'' the report said.