The BHP Group Ltd (ASX: BHP) share price has been out of form in 2024.
Unless there's a major Santa rally between now and the end of the year, the mining giant's shares are going to record a sizeable decline for the 12 months.
As things stand, the Big Australian is on course to finish the period 20% below where it started it.
But what is next for 2025? Will things be better for the miner's shares next year? Let's see what could happen.
BHP share price outlook for 2025
Firstly, as with any miner, the performance of the BHP share price will largely depend on what commodity prices do.
If iron ore and copper perform strongly, then there's every chance that its shares will outperform the market. Particularly given how weak they have been this year.
But will these base metals perform positively? Well, most analysts agree that copper will be strong due to robust demand and supply constraints.
Iron ore, though, is up for debate. Some analysts believe the steel-making ingredient will increase in value, whereas others are warning that it could be under pressure. The deciding factor is likely to be demand from China, which itself may depend on economic stimulus.
As we covered here, analysts at BMI believe the benchmark iron ore price will hover around US$100 per tonne in 2025. This compares to the current spot price of US$106.29 per tonne. BMI said:
We expect iron ore prices to continue to be hit by a weak demand outlook, barring additional support measures from mainland China in the coming months.
Hardly inspiring for the BHP share price. But a lot can change in a short period of time for commodity markets. So don't be surprised if BMI's forecast proves to be way off for better or worse.
Favourable valuation
Outside commodities, one thing in favour of prospective investors heading into 2025 is the BHP share price valuation, which many brokers believe has plenty of upside potential.
For example, Goldman Sachs has a buy rating and $47.40 price target on its shares. This implies potential upside of 17% for investors from current levels. It said:
BHP is currently trading at ~5.8x NTM EBITDA, below the 25-yr average EV/EBITDA of 6.5-7x, but at a premium to RIO on ~5.0x; but at ~0.8x NAV which is in-line with RIO at ~0.8x NAV. Over the last 10 years, BHP has traded at a ~0.5x premium to global mining peers. We believe this premium can be partly maintained due to ongoing superior margins and operating performance (particularly in Pilbara iron ore where BHP maintains superior FCF/t vs. peers).
It is also worth noting that Goldman's valuation is based on the assumption that the iron ore price averages US$95 per tonne in 2025. So, it certainly isn't reliant on strong prices.
Elsewhere, Morgan Stanley has an overweight rating and $46.85 price target and Morgans has an rating and $47.90 price target.
