BHP Group shares: what the City thinks

Victoria Scholar takes a closer look at mining giant BHP Group's (ASX:BHP) performance amid a record cash return to shareholders, and finds out whether City analysts think its shares are a buy, hold or sell.

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BHP’s annual profit jumped 26% to $21.3 billion, the highest in 11 years. The company also reported a record dividend, lifting the stock by more than 5% and the broader mining sector with it. Meanwhile BHP continues to look for acquisitions, having offered to buy OZ Minerals earlier this month. BHP has been a key beneficiary of the surge in commodity prices this year. Coal hit record highs this year following Russia’s invasion of Ukraine. It looks like BHP is keen to deploy its $4 billion of cash as it seeks out effective M&A opportunities in the sector. Another higher offer for OZ Minerals, after its first bid was rejected, looks as though it could be on the cards. Looking ahead, the environment looks increasingly challenging with copper prices down 25% since the March high and with concerns about rising global interest rates, labour constraints and an economic slowdown in China.

Taking a look at the long-term chart dating back to 2017, you can see that since the trough during covid in 2020, we’ve seen an ascending trendline with higher lows and higher highs. However it peaked in June last year and attempted to surpass that high earlier this year but failed to do so. Although price action was more challenging in May, June has seen some more bullish price action emerge once again with the stock breaking above resistance at AU$ 40. The next near-term hurdle appears to be at around 43 dollars with 48.52, the recent the major resistance challenge if the stock continues to trade upwards.

So what do the analysts think? They seem to be pretty neutral to bullish towards the stock. There are nine buys, 11 holds and zero sells, with a recommended price target of AU$ 44.69, representing a 10 per cent premium to the current share price. But this figure has fallen from 52.64 on average in May of this year.

00:00 - Introduction
01:11 - Chart analysis
01:50 - City analysts' view

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[bennygbutter]

Mining truly is more fun than a lot of the individual commodities. New to both, but the mining sub -sector has a lot more nuance and growth potential from my perspective.