The BHP Group Ltd (ASX: BHP) share price had a tough finish to the week.
A falling iron ore price and the release of a mixed quarterly update put pressure on the mining giant's shares.
This means it is now trading at $45.02, which is approximately 13% lower than the 52-week high it reached earlier this year.
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What did analysts say about the update?
Analysts at Goldman Sachs have been looking over the miner's update and note that it was a touch weaker than expected. The broker said:
BHP reported a slightly weaker than expected Mar Q operating result with copper, met coal and nickel production all below GSe, whereas Iron ore production and shipments were above GSe but below Visible Alpha Consensus Data.
Goldman also highlights that there were a few changes to its guidance, but they are all broadly in-line with expectations. It adds:
There were several guidance updates, which were all broadly in-line with our modeled estimates including lower copper guidance at Escondida and nickel production at Nickel West, unit costs in the Pilbara and Escondida tracking to the top end, and Pampa Norte and Olympic Dam copper at the top end.
Is the BHP share price in the buy zone?
Although Goldman sees plenty of value in the BHP share price at the moment, it has decided to keep its powder dry with its recommendation.
According to the note, the broker has retained its neutral rating with a slightly improved price target of $50.50 (from $50.40).
Based on the current BHP share price, this implies potential upside of 12.2% for investors over the next 12 months.
Goldman also estimates that its shares offer fully franked dividend yields of 6.8% in FY 2023 and 5.3% in FY 2024, bringing the total potential return into the high teens.
It highlights that BHP's free cash flow yield is lower than rival Rio Tinto Ltd (ASX: RIO), which it prefers, and suspects it could stay this way due to higher capex expectations. It said:
[F]rom a FCF/DPS perspective, BHP is trading on a FCF/DPS yield of c. 8%/7% & 7%/5% in FY23 & FY24, below Buy-rated RIO (on CL) on 10%/7% & 7%/6%. We see BHP's minerals capex increasing to US$10bn by mid-decade (above peer RIO at US$9-10bn), which could increase to ~US$11-12bn if the acquisition of OZL is successful.
