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Top broker slaps buy rating on BHP Billiton Limited shares

Credit: Lucas Walters

In morning trade the BHP Billiton Limited (ASX: BHP) share price has edged higher to $24.20.

But as far as one leading broker is concerned, this could be the start of much greater gains.

What happened?

This morning a research note out of Deutsche Bank revealed that its analysts have upgraded the mining giant to a buy rating from neutral.

Furthermore, the investment bank has raised its target price from $24.40 to $27.50. This equates to potential upside of 13.5% from the current share price.

According to the note, Deutsche is bullish on the mining giant due to its focus on automation, productivity, and high-returning growth projects.

Overall, it believes that this could lead to significant value for shareholders.

Should you invest?

Whilst I agree with Deutsche that this focus is likely to create value for shareholders, a lot will depend on commodity prices moving forward.

As I’m reasonably bearish on both oil and iron ore, I wouldn’t necessarily be in a rush to invest in BHP at this point.

But if you feel confident that iron ore and oil prices will stabilise or even improve, then BHP could be up there with my favourite Galaxy Resources Limited (ASX: GXY), as a great investment option in the resources sector.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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