The BHP Group Ltd (ASX: BHP) share price is rising on Tuesday.
In early afternoon trade, the mining giant's shares are up over 1% to $38.36.
Why is the BHP share price rising?
Today's gain appears to have been driven by a reasonably positive night for a number of key commodities. This led to the Big Australian's London and US listed shares rising during overnight trade.
In addition to this, some investors may be sensing an opportunity following a recent broker note out of Morgans.
According to the note, the broker has upgraded the company's shares to an add rating with an improved price target of $46.05.
Based on the current BHP share price, this implies potential upside of 20% for its shares before dividends. This increases to 30% if you include the ~$3.95 per share fully franked dividend the broker is forecasting in FY 2022.
Why is Morgans bullish?
The broker is bullish on BHP's shares due to their valuation. Its analysts believe recent weakness has created a buying opportunity for investors.
Morgans commented: "Our cautious view on iron ore remains, but the relative value on offer in BHP has grown as: 1) BHP's share price has fallen (now implying a US$61/t iron ore price), 2) the value of the petroleum demerger has grown with WPL's share price outperformance (the guided 52/48 WPL/BHP merger split suggests the value attributed to BHP has grown US$3.8bn), and 3) BHP's robust dividend profile of +10% at the current share price. With these factors in mind, and BHP now trading at a sizable discount to our target price, we upgrade our rating to Add (from Hold)."
All in all, this could make BHP's shares worth considering if you're looking for exposure to the resources sector.