Macquarie is cooling off on its outlook for BHP shares. Should you?

The BHP Group Ltd (ASX: BHP) share price is up around 1% today to $43.89 and 15% higher over the past 12 months.

Dubbed ‘The Big Australian’, BHP is now the biggest share of the S&P/ASX 200 Index (ASX: XJO) by market capitalisation.

Over the long term, it is probably considered to be among the bluest of blue-chip shares. It is certainly a cornerstone of many retirees’ portfolios.

So, why is BHP among a bunch of ASX 200 shares kicked out of Macquarie’s model investment portfolios?

Macquarie turfs BHP from model portfolios

Brokers publish model portfolios to help their clients keep their investments up-to-date and growing.

However, changes to model portfolios do not indicate an official buy, sell, or hold recommendation.

According to The Australian, Macquarie has dropped several high-profile ASX 200 shares from its model holdings.

On the out is BHP and fellow ASX mining share South32 Ltd (ASX: S32). Also gone are ASX travel shares Flight Centre Travel Group Ltd (ASX: FLT) and Qantas Airways Limited (ASX: QAN).

Also turfed is Australia and New Zealand Banking Group Ltd (ASX: ANZ), Tabcorp Holdings Ltd (ASX: TAH), James Hardie Industries plc (ASX: JHX), and Seven Group Holdings Ltd (ASX: SVW).

Macquarie is forecasting a United States recession in 2023. It thinks the bottom of the market in Australia is six or seven months away.

Macquarie’s Matthew Brooks explains that the changes to the model portfolios were made to “reduce exposure to earnings risks, while still trying to minimise exposure to highly valued stocks”.

There was no specific commentary on BHP shares from the broker.

Morgans says buy the BHP share price

Another top broker, Morgans, has just named BHP shares among its best ideas again this month.

As my Fool colleague James reported yesterday, Morgans likes BHP for its dividends, operational diversity, and strong balance sheet.

Morgans has an add rating on BHP and a $47 share price target.

Morgans commented:

We view BHP as relatively low risk given its superior diversification relative to its major global mining peers.

The spread of BHP’s operations also supplies some defence against direct COVID-19 impact on earnings contributors.

While there are more leveraged plays sensitive to a global recovery scenario, we see BHP as holding an attractive combination of upside sensitivity, balance sheet strength and resilient dividend profile.

The broker is tipping fully franked dividends of approximately $2.96 per share in FY23 and $2.99 in FY24.

The post Macquarie is cooling off on its outlook for BHP shares. Should you? appeared first on The Motley Fool Australia.

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More reading

• Why Calix, Chalice Mining, Qantas, and Whitehaven Coal shares are rising
• Markets are nervous. Why waiting to buy these ASX 200 shares could prove expensive
• Looking to buy ANZ shares? Here’s why the ASX 200 bank is hitting headlines
• Qantas share price soars 6% on surprise profit guidance upgrade
• Will ASX 200 shares bottom before the year is out? Here’s Macquarie’s ‘best guess’

Motley Fool contributor Bronwyn Allen has positions in Australia & New Zealand Banking Group Limited, BHP Billiton Limited, Flight Centre Travel Group Limited, James Hardie Industries plc, Macquarie Group Limited, and Qantas Airways Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group Limited and Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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