BHP Group Ltd (ASX: BHP) shares have been in focus this week.
That's because the Big Australian released its highly anticipated first quarter update on Tuesday.
The team at Macquarie Group Ltd (ASX: MQG) has been looking at the update. Let's see what it is saying about the mining giant's performance and whether it thinks a buying opportunity has been created.
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What is Macquarie saying?
Overall, Macquarie was relatively pleased with the company's performance during the quarter. It said:
Met-coal: BMA's production 4.9Mt was a 9% beat driven by Broadmeadow production rates and increased stripping in open cut operations. Realised pricing of US$181/t was inline. A longwall move is expected in 2QFY26, with volumes set to recover in 2HFY26. Escondida: Although pre-reported, BHP still recorded a beat at Escondida by 3%, driven by flat grades and production against a perceived decline. BHP emphasised production's 1HFY26 weighting.
Macquarie also highlights that BHP has indirect exposure to the booming gold price from its copper operations. This has led to upgrades to its earnings per share estimates. It adds:
Hidden gold leverage: Using our updated gold deck which utilises a forward curve across FY26-28, we see EPS upgrades of 4% in FY27/28 given Escondida and Olympic Dam by-products.
Earnings changes: Incorporating 1QFY26 update has resulted in modest changes to our earnings forecasts with EPS change less than 1% for FY26E. FY27 and FY28E earnings are upgraded by 4% on higher gold prices.
Should you buy BHP shares?
According to the note, Macquarie has lifted its valuation for BHP's shares following the earnings per share upgrade.
However, it isn't enough to warrant a buy recommendation just yet. It has retained its neutral rating with an improved price target of $43.00. This is largely in line with where BHP shares are currently trading.
Commenting on its recommendation and preference for rival mining giant Rio Tinto Ltd (ASX: RIO), the broker said:
Neutral: After a solid start to FY26, we recently switched preference to RIO (RIO AU/RIO LN; Neutral) over BHP due to a better catalyst backdrop into next year. Although BHP's portfolio of quality assets is still enviable, growth catalysts appear to be longer dated than peers.
Valuation: We increase target price by 2% for ASX to A$43.00 and 1% for LSE to £20.80 (unchanged NPV-EV/Ebitda blend). Catalysts: FDS resource and study updates (1HCY26), Jansen S2 Capex update (4QFY26), Escondida new concentrator DIA submission (4QFY26).
