The BHP Group Ltd (ASX: BHP) share price has been in sensational form this month.
Since the start of November, the mining giant's shares have smashed the market by storming 19% higher to $44.55.
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Can the BHP share price keep rising?
Unfortunately, one leading broker is calling time on the BHP share price rally.
According to a note out of Goldman Sachs, its analysts have just downgraded the Big Australian's shares to a neutral rating with an improved price target of $42.90.
Based on the current BHP share price, this implies potential downside of just under 4% for investors.
What triggered the downgrade?
Firstly, Goldman notes that BHP is looking to acquire OZ Minerals Limited (ASX: OZL) and feels it "could improve returns from Olympic Dam." However, as this takeover is a long way from completion, it isn't included in its estimates.
In light of this, for the time being, the broker believes BHP's shares are now trading ahead of fair value and has thus downgraded them on valuation grounds. Its analysts explained:
Despite a lift in our BHP group NAV [net asset value] to A$41.8/sh after incorporating the 2-stage smelter at Olympic Dam in our base case and some nominal value for Oak Dam, we downgrade BHP to Neutral (from Buy) based on: (1) Valuation vs. global peers and no upside to revised PT of A$42.9/sh (from A$42.3; ~4% downside vs. our global Mining coverage at ~15% upside), (2) Lower production growth vs. peers, even with +US$20bn copper pipeline optionality, (3) Lower FCF vs. peers.
Goldman currently prefers rival mining giant Rio Tinto Ltd (ASX: RIO) and is recommending it as a buy with an improved price target of $114.70.
