BHP Group Has ‘Attractive Valuation’ Says Goldman Sachs

Investment bank Goldman Sachs has identified BHP Group as having an “attractive valuation” in a note this week.

According to research note highlights posted by TheFly, the bank reinstated the stock's London-listed shares with a Neutral rating and a 2,400p price target, while its shares traded in Australia were initiated with a Buy rating and an A$49 price target.

Goldman Sachs told investors BHP provides optionality with a $20 billion copper pipeline and robust production growth from 2024 to 2025.

In addition, they highlight BHP's major opportunity in its growing copper production in Chile at Escondida and Spence. The fact it is growing copper production and capturing synergies in South Australia are seen as positives for the company.

Meanwhile, TheFly said that in a separate note, Goldman Sachs analyst Paul Young reinstated BHP Group traded in Australia with a Buy rating, highlighting that the company's stock's six-times expected next 12 months' EBITDA multiple represents an “attractive valuation.”

The Goldman Sachs analyst points out that while BHP Group's stock's six-times expected next 12 months' EBITDA multiple represents an “attractive valuation”, it is a premium to Rio Tinto's five times. However, Young believes this premium can be maintained due to BHP Group's ongoing superior margins and operating performance.

Goldman Sachs is also reportedly bullish on copper. It sees BHP generating $6.8 billion in copper EBITDA this year and $11.5 billion in FY 2025 based on continuing supply-side challenges and increasing demand.