The ASX mining share BHP Group Ltd (ASX: BHP) has seen a fair amount of volatility over the past several months, but it has drifted lower in that time, as the chart below shows.
With a lower valuation, investors may be wondering whether the mining giant is an opportunity.
Resource prices can typically be volatile and cyclical, so there can be an opportunity to buy shares at a lower level sometimes and benefit from the recovery. So, let's consider if the BHP share price is a buy.
Analysts are positive on the ASX mining share
According to Commsec's collation of analyst recommendations on BHP shares, there are 11 buy ratings and nine hold ratings. In other words, the average rating is a buy and there are no negative ratings about the company.
UBS is one of the brokers that is neutral on the ASX mining share following the release from the company's FY25 third quarter update and Jansen update.
The broker is currently forecasting that in FY25, BHP could generate US$49.6 billion of revenue, US$19.4 billion of operating profit (EBIT) and US$9.8 billion of net profit after tax (NPAT).
UBS noted that since the failed Anglo American bid, BHP's focus has sharpened onto the execution of its organic copper and potash growth pipeline, with the company believing these areas will deliver superior value compared to acquisitions.
BHP has increased its capital expenditure from US$7 billion in FY23 to around US$10 billion in FY25 and expects this to hold around US$11 billion in the medium-term.
UBS said that the Jansen potash (fertiliser) project in Saskatchewan is on track to be the first of the large new copper and potash capital projects to deliver substantive new volume growth, followed by the copper projects in the 2030s.
Bullish on Jansen
UBS thinks that Jansen's contribution could help drive around 25% EBITDA growth to FY30, which could help BHP shares. The broker said:
The Jansen project will comprise much of BHP's growth through to end of decade. We expect the Stage 1 and 2 to sequentially ramp up with total 8.5Mtpa production achieved by FY32. Jansen should deliver ~60% EBITDA margins, in line with the iron ore business and above the group average of 50-55%; the cash conversion is also high at >80% with sustaining capex low; we expect Jansen to generate annual FCF of ~$1.8bn at a potash price of US$325/t (fob Vancouver). We note potash prices have picked up in 2025 more than expected (Brazil spot at $365/t, up 20% YTD).
The broker has a price target of $40 on the business, implying a possible rise of 4.5% from where it is today. UBS is also projecting that BHP could pay an annual dividend per share of US 97 cents in FY25.
Overall, things are looking fairly positive for BHP shares in the longer-term.
