Here's what this leading broker is saying about the BHP share price

BHP's shares have been on fire this week. Is there more left in the tank?

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The BHP Group Ltd (ASX: BHP) share price has been on fire in recent days.

So much so, the mining behemoth's shares are up approximately 5% since the start of the shortened week.

This has been driven largely by a rebound in commodity prices due to events in China.

In addition, a broker note out of Goldman Sachs may have given the BHP share price a boost.

What did Goldman say about the BHP share price?

Earlier this week, Goldman Sachs released a note highlighting that the global mining sector was trading at a significant discount to historical multiples. It explained:

A review of the past 25 yrs of mining sector valuations shows the Top 20 global miners are currently trading below history on just ~4.5x NTM EV/EBITDA, well below the 25-yr historical average of 6.0x. This is despite strong balance sheets and FCF positions relative to the past few decades, and a strong long run fundamental outlook for commodities due to undersupply and new demand from decarbonisation.

In light of this, the broker reiterated its buy ratings on BHP, Rio Tinto Ltd (ASX: RIO), and South32 Ltd (ASX: S32) shares.

Not much upside left

It is worth noting that with Goldman having a buy rating and $46.90 price target on the Big Australian's shares, there is limited upside from current levels. So, it may be worth holding out for a pullback.

Unless you're looking for a source of income, in which case BHP shares could be right up your alley.

Goldman is forecasting fully franked dividends per share of US$1.90 in FY 2023 and US$1.50 in FY 2024. This equates to A$2.81 per share and A$2.22 per share at current exchange rates.

It is also the equivalent of 6.1% and 4.8% dividend yields, respectively.

Commenting on its buy rating, Goldman revealed that copper is what is attracting it to BHP. It concludes:

For BHP, we continue to believe that its major opportunity (and challenge) is growing copper production and offsetting copper reserve depletion and grade decline in Chile, and growing copper production and capturing synergies in South Australia.

All in all, the mining sector looks like a great place to be right now based on what Goldman Sachs is saying.

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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