The BHP Group Ltd (ASX: BHP) share price has fallen to a 52-week low of $41.57 this morning. It's currently down 0.4% compared to a decline of 0.8% for the S&P/ASX 200 Index (ASX: XJO).
The ASX mining share has been suffering from weakening sentiment about some of its commodities, with nickel going through a lot of pain. It recently decided to (temporarily) stop production of nickel and has announced impairment charges totalling US$3.8 billion. The company said it intends to review the production halt decision by February 2027.
BHP's recent operational update didn't seem to excite the market. Both copper and iron ore quarterly production increased by 6%.
However, buying strong blue-chip shares at a low price can be an effective strategy. So given those recent updates, is this lower BHP share price too good to miss?
Expectations for FY25
When BHP announced its June 2024 update, the company also revealed the amount of production it expects in FY25.
The mining giant said it's expecting to produce between 1,845kt and 2,045kt of copper in FY25, which could mean a 1% decline or up to a 10% rise. Iron ore production is guided to be between 255mt and 265.5mt, which could mean a 2% decline or a 2% rise.
Metallurgical coal production is expected to drop between 15% to 25%, while energy coal production is projected to fall between 2% to 15%.
Now that investors have seen those numbers, analysts have produced estimates for what they think the company's revenue and profit could be in the 2025 financial year.
The broker UBS called the FY25 production guidance "soft" compared to what the market was expecting. UBS was predicting 289mt of iron ore production in FY25. However, the broker did note that the five-year target of at least 305mt per annum was maintained with a 'hockey stick' trajectory.
UBS is now expecting that BHP can generate revenue of US$55.6 billion in FY25, which is only slightly lower than how much revenue the broker thinks BHP will make in FY24 (US$55.8 billion).
The broker thinks BHP will make earnings before interest and tax (EBIT) of US$23.5 billion in FY25 and US$12.7 billion in net profit after tax (NPAT). This would be slightly lower than the broker's estimated profit of US$12.9 billion in FY24.
UBS thinks BHP will be "conservative" with the dividend payout ratio as it's expected to increase its capital expenditure "materially" in FY25 and FY26.
Is the BHP share price a buy?
UBS is neutral on the company, with a price target of $43. While that does imply UBS believes BHP shares will be higher a year from now, it doesn't suggest much capital growth.
At the right time, I think BHP shares can be a cyclical opportunity. However, the iron ore price remains comfortably above US$100 per tonne, and I don't think the ASX mining share is a compelling, potentially market-beating buy unless there is more fear surrounding iron ore.
I'd wait for an even lower BHP share price before investing.
