The BHP Group Ltd (ASX: BHP) share price tumbled this morning after brokers downgraded the stock along with another ASX miner.
Shares in the Big Australian tanked 2.9% to $37.70 at the time of writing while the S&P/ASX 200 Index (Index:^AXJO) fell 1%.
BHP is also underperforming its peers. The Rio Tinto Limited (ASX: RIO) share price slipped 1.2% to $104.85 while the Fortescue Metals Group Limited (ASX: FMG) share price fell 1.9% to $16.43.
Hit by two downgrades
BHP is worst for wear as not one, but two brokers cut their rating on the stock. Citigroup lowered its recommendation on the stock to "neutral" from "buy" following the release of the miner's quarterly production report.
"In terms of Citi expectations, [June quarter production] was better than expected in Copper and Iron Ore but weaker in Metallurgical and Energy Coal and Petroleum," said the broker.
"FY20 Underlying NPAT revised down 10% to $9.1bn given FY20 prodn and financial impacts."
Despite this, Citi kept its price target on BHP at $40 a share but with the stock trading close to this target, BHP couldn't still be seen as a buy.
Looking fully valued
Meanwhile, Morgans also cut its rating on the miner to "hold" from "add" even though it thought BHP's quarterly was "strong". Only petroleum output failed to meet its expectations.
"WAIO production of 76mt was 5% above our estimate, while copper came in 9% ahead of our estimate at 414kt," said Morgans who lifted its price target to $37.20 from $36.70 a share.
However, BHP's recent share price outperformance means there's little valuation upside left to justify a more bullish rating from the broker.
Losing its shine
Meanwhile, the Perseus Mining Limited (ASX: PRU) slumped by over 3% at the time of writing. It too suffered a broker's downgrade following its quarterly production update.
Credit Suisse lowered its recommendation on the gold miner to "underperform" (which means a sell) from "neutral" even as it increased its 12-month price target to $1.30 from $1.11 a share.
Perseus produced 65,000 ounces of gold in the final quarter of FY20 to take the full year gold output to 258,000 ounces.
Production and cost missed targets
This is below management's earlier guidance of 275,000 to 295,000 ounces, which was subsequently withdrawn due to the COVID-19 pandemic.
This isn't the only disappointment. The miner's all-in sustaining cash cost for FY20 came in at US$972 an ounce when management was aiming for US$850 to US$950 per ounce.
"A modestly disappointing operating quarter from persistently challenging Edikan which was responsible for the 6% shortfall vs withdrawn group guidance," said the broker.
"Sissingue continues to perform well, although its recent grade undercall is a minor concern (overall recovered reconciliation to date positive)."
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