The BHP Group Ltd (ASX: BHP) share price is falling again on Thursday.
In afternoon trade, the mining giant's shares are down almost 3% to $38.15.
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Why is the BHP share price falling?
Investors have been selling down the BHP share price over the last two sessions after its quarterly update disappointed.
That update revealed that its production missed consensus estimates across most commodities.
Is this a buying opportunity?
One leading broker that is sticking with BHP after its update is Goldman Sachs.
According to a note this morning, the broker has retained its buy rating with a trimmed price target of $42.50.
Based on the current BHP share price, this suggests potential upside of 11.5% for investors over the next 12 months.
Goldman is also forecasting a fully franked 6.6% dividend yield in FY 2023, boosting the total potential return beyond 18%.
What did the broker say?
Goldman summarised BHP's quarterly update as follows:
BHP reported a weaker than expected start to FY23 with an 11% QoQ decrease in copper production to 410kt on lower grades and throughput at both Escondida & Spence in Chile, and a 24% drop in met coal production from Qld due to wet weather and continued labour shortages.
Pilbara shipments of 70.3Mt were in-line with GSe. FY23 production and cost guidance for all commodities remains unchanged, although we think Escondida & met coal will be right at the bottom end.
Overall, it remains positive enough on the miner to maintain its buy rating following this update. This positive view is based partly on the following:
BHP is currently trading at ~5.5x EBITDA vs. global peers (including GLEN & AAL) at ~3-4x EBITDA, and at ~1x NAV. We believe this premium vs. peers can continue to be maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore), high returning copper growth, and lower iron ore replacement & decarbonisation capex vs. peers.
We also highlight BHP's higher exposure to lower operating jurisdictions such as Australia and Canada relative to global mining peers, along with their #1 global position in the high quality metallurgical coal seaborne market.
