BHP Group Ltd (ASX: BHP) shares are trading higher on Wednesday.
In afternoon trade, the mining giant's shares are up 2.5% to $46.39.
Investors have been piling into the resources sector today following the release of strong economic data out of China.
According to CNBC, China's official manufacturing PMI hit 52.6 in February, which is above the 50-point mark that separates growth from contraction. Importantly, it is also the highest reading since April 2012, when the manufacturing PMI hit 53.5.
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Should you buy BHP shares at $46?
In light of the above, investors may be wondering if BHP shares are good value at $46.00.
Unfortunately, opinion remains divided on the mining giant at the current level.
Goldman Sachs, for example, sees modest upside for the Big Australian's shares and has a neutral rating and $48.00 price target. It 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.
However, over at Macquarie, its analysts are far more positive and see plenty of value in the BHP share price.
Last week, the broker put an outperform rating and $52.00 price target on its shares. This implies potential upside of 12% over the next 12 months.
In addition, the broker is expecting a ~$2.66 per share fully franked dividend in FY 2023. This equates to a 5.7% dividend yield, which stretches the total potential return to almost 18%.
Time will tell which broker makes the right call.
