The BHP Group Ltd (ASX: BHP) share price had a top run in November, but can its dream run continue?
BHP shares soared 21.84% last month from $37.36 a share to $45.52 a share. At the time of writing, the BHP share price is holding its own for a 0.36% gain. For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.21% in the red in lunchtime trading.
Let's check what might be in store for the BHP share price.
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BHP share price gains
BHP is a major ASX iron ore producer. Higher iron ore prices in November appeared to boost the BHP share price.
The iron ore price soared 27% during the month from US$81 per tonne at the start of November to US$103 a tonne at the end. Iron ore contributed 53.4% of BHP's underlying EBITDA in the 2022 financial year.
Also in November, BHP submitted an improved acquisition offer for OZ Minerals Limited (ASX: OZL) for a cash price of $28.25 a share. The OZ Minerals board advised it intends to recommend BHP's proposal.
Commenting on the deal, BHP CEO Mike Henry said at the time:
BHP's proposal represents a highly compelling offer for OZL shareholders, providing certainty at a time of macroeconomic uncertainty and market volatility, and increasing risks for the industry.
What's ahead?
Broker outlook on the BHP share price is mixed. For example, Morgans retained an add rating and placed a $47 price target on BHP's shares in November. Morgans also predicted a fully franked dividend of $2.96 a share for BHP in FY 2023. Analysts said:
We view BHP as relatively low risk given its superior diversification relative to its major global mining peers.
On the flip side, analysts at Goldman Sachs downgraded BHP's share price to neutral with a price target of $42.90. Goldman was concerned about BHP's valuation and production growth versus its peers in the sector.
Meantime, Bell Direct market analyst Grady Wulff recently named BHP as a stock he would want to hold if the "market closed tomorrow for four years". He told Motley Fool:
I think for us it's BHP because it's diversifying into the battery metal space as we've just recently seen through its acquisition of OZ Minerals for $9.6 billion.
This is really important to note, because to date, they're obviously one of the biggest miners in the world, but they hadn't diversified into the way forward, which is decarbonisation, greener future, greener energy — and now they've got that under their belt.
Looking at the iron ore price, Citi appears optimistic on iron ore in the short term amid China's COVID policy shift. Analysts said:
Policy tailwinds are likely to remain in favour of the bulls in the short term. A perceived U-turn in China's Covid policy and the country's efforts to shore up the beleaguered property sector drove an iron ore price rally during November.
We expect further improvement in reopening sentiment. However, we maintain our view that the physical fundamentals will remain weak in the near term.
BHP share price snapshot
The BHP share price has surged 32% in the last year, while it has soared more than 26% year to date.
For perspective, the ASX 200 has slipped around 0.5% in the last year.
BHP has a market capitalisation of more than $236 billion based on the current share price.
