BHP Group Ltd (ASX: BHP) shares will be on watch next week.
That's because the mining giant will be releasing its hotly anticipated quarterly update.
Ahead of the release on Thursday 18 April, let's take a look at what the market is expecting from the Big Australian.
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What is expected from BHP?
According to a note out of Goldman Sachs, it is expecting BHP to have a reasonably solid quarter.
For example, copper production is expected to come in at 457kt for the three months. This is up 4.1% on the previous quarter and 12.5% year on year. It is also largely in line with the consensus estimate of 459kt.
Also expected to increase quarter on quarter is metallurgical coal production. Goldman expects BHP to report production of 7.3Mt for the three months. This would mean an increase of 27% on the previous quarter and 5.8% on the same period last year. Goldman's estimate is also ahead of the consensus estimate of 6.8Mt.
For nickel, the broker is forecasting production of 17.6kt for the period. This will be down 10.2% on both the prior corresponding period and year on year. It is also well short of the consensus estimate. That is 19.8Mt, which implies modest growth on previous periods.
Finally, let's now take a look at iron ore, which is of course the biggest contributor to BHP's earnings.
Unfortunately, Goldman believes that the miner's iron ore shipments will be short of expectations for the quarter. It has pencilled in shipments of 66.8Mt for the three months, which is down 5% from the previous quarter and largely flat year on year. The consensus estimate for iron ore shipments is 70.2Mt.
Are BHP shares in the buy zone?
Interestingly, despite predicting below-consensus iron ore shipments and nickel production, Goldman Sachs is one of the more bullish brokers out there.
Its analysts currently have a buy rating and a $49.20 price target on BHP's shares. This implies a potential upside of 8.3% for investors from current levels.
In addition, the broker is forecasting fully franked dividend yields of 4.8% and 4.2% in FY 2024 and FY 2025, respectively.
Combined, investors buying at current levels would generate a total return beyond 12% over the next 12 months if Goldman Sachs is on the money with its recommendation.
This means that a $20,000 investment could be in excess of $22,400 this time next year if all goes to plan.
