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BMO reaffirms BHP Group stock at Outperform amid mixed Q3 but strong copper performance

EditorEmilio Ghigini
Published 2024-04-18, 08:56 a/m

On Thursday, BMO (TSX:BMO) Capital maintained its positive stance on BHP Group (NYSE:BHP) Limited's stock, reiterating an Outperform rating and a price target of GBP28.00. The firm's assessment followed BHP's third fiscal quarter report for 2024, which presented a varied performance across its operations.

The copper segment of the business showed strength, while the iron ore division faced challenges due to adverse weather conditions and tie-in activities. Additionally, there were slight adjustments to the coal production guidance, including an 8% reduction in metallurgical coal volumes.

Despite these mixed results, BMO Capital's full-year EBITDA forecast for BHP remains steady at $29.5 billion. The firm's analyst highlighted BHP's ability to maintain its competitive edge, citing efficient operations and some of the lowest cost assets in the industry. This efficiency, according to the analyst, justifies a premium valuation for BHP compared to its peers.

BHP Group, listed on both the Australian Securities Exchange (BHP:AU) and the New York Stock Exchange (NYSE: BHP), has a diversified portfolio that includes the extraction and processing of minerals, oil, and gas. The company's performance is often seen as a bellwether for the broader commodities market due to its significant global footprint.

The analyst's comments underscore the company's resilience in the face of sector-specific challenges, particularly in the iron ore and coal segments. BHP's ability to deliver a strong performance in its copper operations has helped to balance the impact of less favorable conditions in other areas of its business.

InvestingPro Insights

Complementing BMO Capital's optimistic outlook on BHP Group Limited, InvestingPro data provides a robust financial perspective on the company's performance. With a market capitalization of $147.24 billion and a P/E ratio that has adjusted to a more attractive 15.31 in the last twelve months as of Q1 2023, BHP shows a strong financial standing. The company's dividend yield is particularly noteworthy at 4.88%, underscoring BHP's commitment to returning value to shareholders, which it has done consistently for 45 years.

InvestingPro Tips highlight BHP's significant dividend payments and its low price volatility, which may appeal to investors looking for stable returns in a volatile market. Additionally, the company's free cash flow yield is implied to be strong, indicating that it is generating ample cash relative to its share price. For those interested in further insights, InvestingPro offers several additional tips on BHP Group, which can be accessed at Investing.com/pro/BHP. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription and explore a total of 9 InvestingPro Tips that provide a deeper analysis of BHP's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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