The BHP Group Ltd (ASX: BHP) share price is edging higher on Friday.
In afternoon trade, the mining giant's shares are up a fraction to $45.80.
Where next for the BHP share price?
With a new year upon us, investors may be wondering where the BHP share price is heading next.
With that in mind, I thought I would take a look to see what analysts are saying about the Big Australian's shares at current levels.
And, as you might have guessed, after a strong showing in 2022, (see below) opinion is quite divided on the mining giant now.
What are brokers saying?
Most brokers are sitting on the fence with hold and neutral recommendations.
Morgans, for example, downgraded the miner's shares to a hold rating with a $44.80 price target earlier this month. This is largely in line with where its shares trade today.
The broker explained that the downgrade was made on valuation grounds. It said:
We can certainly see the potential green shoots for a recovery in demand drivers for steel, but it is also not hard to see a fresh bout of volatility before that recovery takes hold. We view current share prices on our large-cap iron ore miners as suggesting we have to 'pay up front' for that potential recovery, leaving us with lower conviction. As a result we downgrade our rating on BHP and RIO to HOLD (from ADD), while maintaining a REDUCE on FMG.
UBS went one step further and downgraded the miner's shares to a sell rating with a $40.00 price target a couple of weeks ago. It said:
The macro backdrop is still fragile with global growth slowing and China's reopening challenging in winter, iron ore fundamentals are still weak, and the stock is expensive at normalized commodity prices with free cash flow yield less than 5% at $80/ton iron ore and $180/ton met-coal.
The lone bull
As far as I'm aware, the lone bull at present is Macquarie with its outperform rating and $50.00 price target. This implies potential upside of approximately 9% for investors in 2023.
Macquarie likes BHP due to its belief that current iron ore prices could lead to the mining giant outperforming estimates in FY 2023. The broker is also expecting a generous 6%+ dividend yield next year to sweeten the deal further.
Time will tell which brokers make the right call.
