The BHP Group Ltd (ASX: BHP) share price is underperforming on Thursday.
In early afternoon trade, the mining giant's shares are down slightly to $39.52.
This compares unfavourably to the ASX 200 index, which is currently up by 0.4%.
Where next for the BHP share price?
The good news for investors is that one leading broker believes the BHP share price could be heading higher from here.
According to a note out of Goldman Sachs from this week, it has a buy rating and $43.50 price target on the Big Australian's shares.
This implies potential upside of 10% from current levels for investors over the next 12 months.
And if you include the ~6% fully franked dividend yield that the broker is expecting, this potential return stretches to 16%.
Three reasons to invest
Goldman has named three key reasons why it is bullish on the BHP share price.
The first is its relative valuation. The broker believes that BHP's quality means that it should continue to trade at a premium to its global peers. It explained:
Relative valuation: BHP to continue trading at a premium to global mining peers (~0.5x premium to global mining peers over 10-yrs) which we believe can be maintained.
Another reason for its positive stance is the miner's copper operations, which have huge growth potential. It commented:
~US$20bn copper pipeline to drive production growth and value: BHP's major opportunity (and challenge) is offsetting copper reserve depletion and grade decline through investing in copper reserves/resources (largest globally).
Finally, the third reason is the company's strong free cash flow generation and attractive dividend outlook. It concludes:
Attractive FCF and capital returns outlook: BHP is trading on an attractive FCF/DPS yield of c. 5%/6% over the next 12-m. BHP's minerals capex increasing to US$8-9bn by mid-decade (but below peer RIO at US$9-10bn).
