BHP Group Ltd (ASX: BHP) reported its FY25 result earlier this week and analysts have given their view on the business and how the BHP share price could perform in the coming year.
As the chart above shows, the miner is close to its 2025 high – investors appear to be more positive now than they have been for a lot of the current calendar year.
The BHP result was impacted by lower iron ore and coal prices, though an improvement for copper helped offset some of that pain. Under those circumstances, it's not surprising that revenue, underlying net profit and dividend all reduced.
But, analysts were reasonably pleased by what they saw from the result and the potential outlook.
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Expert view on the FY25 result
Broker UBS said BHP delivered a "strong and clean finish" to FY25, with strong 'operating free cash flow', favourable working capital and lower capital expenditure, leading to slightly lower than expected net debt and a higher than expected final dividend payout of US 60 cents per share.
The broker said that FY25 was underpinned by "class leading performance" in iron ore, which made just over half of operating profit (EBITDA) and a strong improvement in copper (making 45% of EBITDA).
UBS pointed out that BHP has further optimised the timing and sequencing of capital expenditure at Escondida, Copper South Australia and Jansen. Medium-term capital expenditure, for the years of FY28, FY29 and FY30 has been reduced by around US$1 billion per year to approximately US$10 billion per year.
The broker also noted that the net debt range have been lifted by US$5 billion to a range of $10 billion to $20 billion to "reflect the strength and quality of the business" and its higher debt servicing capacity.
UBS also pointed out that BHP "takes its 50% minimum payout for the dividend "very seriously" and the dividend payout ratio of 60% of earnings in the six months to June 2025 was due to the "strong operational performance" of the group.
In terms of the two most important commodities for BHP shares and its profit, UBS wrote:
Iron ore: WAIO recorded record production in FY25 with industry leading C1 cash costs. It expects flat production in FY26 and only a modest ~2% increase in FY26. BHP has approved the investment in car-dumper #6 for US$0.9bn that will underpin >305Mtpa production from 4Q-FY28, and especially through a period of heavy cardumper maintenance from FY29. In our opinion, the 6th car-dumper also allows BHP to creep WAIO shipments medium/long-term to ~330Mt though further investment will be needed (eg in mines/ port) so we have not yet factored this in our forecasts.
Copper: BHP guides unit costs at Escondida to lift +13% y/y in FY26 with volumes to fall -8% to ~1.2mt, and Spence to lift +9% y/y with volumes -10%; this is broadly in line with consensus. Unit costs at Copper S AU are seen at +6% y/y despite volumes lifting 3% y/y albeit we note this uses a conservative gold forecast of $2900/oz. BHP still expects Vicunia to publish a technical report in 1Q CY26 and apply for Rigi in mid-CY26; it aims to have a smaller project initially centred around Josemaria, then expand into oxides etc; it will equity account for the project (JV balance sheet structure still to be decided).
BHP share price target
UBS currently has a neutral rating on the business and a price target of $42. A price target is where the analyst thinks the share price will be in 12 months from now. That implies only a slight change from where it is today, at the time of writing. UBS is currently forecasting the business could make US$9 billion of net profit in FY26 and pay an annual dividend per share of US 90 cents.
