The BHP Group Ltd (ASX: BHP) share price is on form on Wednesday.
In afternoon trade, the mining giant's shares are up 1.5% to $37.14.
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Can the BHP share price keep rising?
As far as one leading broker is concerned, this could be the start of further gains for the BHP share price.
According to a note out of Goldman Sachs, its analysts have responded to BHP's quarterly update by retaining its buy rating with a trimmed price target of $40.80.
This implies a potential return of 10% for investors over the next 12 months before dividends and approximately 20% including them (BHP's final dividend of FY22 and interim dividend of FY23).
What did the broker say?
Goldman was pleased with BHP's performance during the fourth quarter of FY 2022. It notes that strong iron ore and copper production offset softer metallurgical coal production.
The broker was also impressed with the Big Australian's cost performance, particularly in comparison to its rivals.
It commented:
BHP reported a strong operational performance to end FY22 with an 8% QoQ increase in iron ore production (South Flank ramp-up) and a 25% lift in copper (rebound in grades at Escondida), offsetting a 16% drop in met coal production due to wet weather. Solid relative cost performance vs. peers continues with BHP achieving FY22 guidance for most assets. Realised price performance was mixed as usual, with better achieved met coal prices, but lower iron ore and copper price (incl negative provisional pricing) vs. GSe.
And while Goldman Sachs was a touch disappointed with some aspects of BHP's guidance for FY 2023, the broker was pleased with its guidance for key operations.
Released guidance for FY23 production is on average 2-3% below GSe, but importantly the largest and highest margin assets such as Pilbara iron ore & Escondida copper were in-line or above our estimates. We forecast a c.5% increase in Cu Eq production in FY23 (continuing operations) despite the ramp-up of Spence sulphides and Nickel West continuing to underperform.
Overall, in light of the above, its attractive valuation, strong free cash flow, and big dividends, Goldman continues to see plenty of value in the BHP share price and reaffirms its buy rating.
