Should I buy BHP's shares after the ASX 200 miner's latest update?

Is it time to pounce on this mining giant's shares following its results release?

Key points
  • BHP shares are down 10% from their recent highs
  • Some of this decline was driven by the release of its results this week
  • Brokers have given their verdict on its performance and its shares

BHP Group Ltd (ASX: BHP) shares are having a relatively flat session.

In afternoon trade, the ASX 200 mining giant's shares are trading 0.1% lower at $48.24.

This means the BHP share price is now down 10% from its recent high.

Worker in hard hat looks puzzled with one hand on chin

Image source: Getty Images

Should you buy BHP shares following its update?

According to a note out of Morgans, its analysts were disappointed with the Big Australian's first-half result and notes that it fell well short of expectations. It commented:

BHP reported a softer start to FY23 than we expected, with inflationary pressures and added inventory costs contributing to lower first half earnings. 1H23 missed consensus estimates by 5% at both EBITDA and EPS.

In light of this, the broker believes investors should keep their powder dry and wait for a better entry point.

The note reveals that its analysts have retained their hold rating with a trimmed price target of $46.70. This implies potential downside of 3.2% from current levels. Morgans adds:

Post the 1H23 result we maintain our HOLD rating. We continue to view BHP as offering exposure to China re-opening, with high quality earnings and a healthy dividend. Although at current levels it appears trading around fair value territory.

It's a similar story over at Goldman Sachs. Its analysts have retained their neutral rating with a trimmed price target of $48.00 on BHP's shares. The broker commented:

BHP is currently trading at ~6x NTM EBITDA vs. global peers (including RIO, GLEN & AAL) at ~5x EBITDA, and at ~1.1x NAV vs. RIO at ~0.9x NAV. Although we believe this premium vs. peers can be partly 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, we highlight potential downside to our PT of A$48.0/sh.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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