BHP Buyback on the Cards, Says JP Morgan -- Market Talk

2320 GMT [Dow Jones] An increasingly cashed-up BHP Billiton Ltd. (BHP.AU) is likely to announce plans for a buyback worth around US$3 billion at its results next month, tips J.P. Morgan analyst Lyndon Fagan. "An expected circa US$2.3 billion of excess capital through FY15 should leave the company well placed to approve an on-market PLC buy-back when it reports on Aug. 19," he says. Fagan rules out the potential for a special dividend, citing its track record of preferring buybacks. For peer Rio Tinto PLC (RIO), he says management will likely have to wait until 2016 before any such move, given the decline in iron-ore prices. Nevertheless, Fagan expects BHP's capital management will likely be only 1% EPS accretive, so continues to favor RIO on which he keeps an overweight rating. He retains a neutral recommendation on BHP. ([e-mail]; Twitter: @RhiannonHoyle)

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