The BHP Group Ltd (ASX: BHP) share price was out of form on Wednesday following the release of its third quarter update.
The mining giant's shares fell 0.5% to $47.21.
How did BHP perform?
For the three months ended 31 March, BHP delivered record production at Western Australia Iron Ore (WAIO) and record average concentrator throughput at its Escondida copper mine.
This led to the miner holding firm with its FY 2021 production guidance for petroleum and iron ore and lifting its copper production guidance.
However, one area not performing in line with expectations is its metallurgical coal business. BHP has reduced its guidance due to poor weather conditions.
Is the BHP share price in the buy zone following its update?
Analysts at Goldman Sachs were pleased with BHP's performance during the third quarter. As a result, the broker has retained its buy rating and lifted its price target to $54.20.
Based on the current BHP share price, this implies potential upside of almost 15% over the next 12 months.
And with Goldman Sachs forecasting fully franked dividend yields of 6.6% and 6.7%, respectively, over the next two years, this potential return stretches to over 21.5%.
What did Goldman say?
Goldman commented: "BHP reported better than expected oil, met coal, copper and iron ore production for the March Q (vs. GSe). Some positive adjustments have been made to FY21 production guidance, most of which we already capture, with Escondida copper production upgraded (and cost guidance lowered), and now expected to be flat in FY22 (previously guided down), iron ore and oil to be at the upper end of the FY21 range, but coal (met and thermal) downgraded (to in-line with GSe) on wet weather and weak demand, and other copper (Spence ramp-up) trimmed slightly."
"We retain our Buy rating on BHP on […] strong earnings growth and FCF: We forecast a c. 50% increase in EBITDA and a doubling of FCF in FY21 (equating to c. 10% FCF yield), driven by our positive view on met coal, copper and oil prices," it added.
