Is the BHP share price a buy? Here's UBS' view

Let's dig into what an expert thinks of this mining giant.

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The BHP Group Ltd (ASX: BHP) share price has suffered from the significant volatility of the last few weeks. Some investors may be worried that US tariffs on China could impact demand for iron ore (and other commodities). As the chart below shows, BHP shares are down 8% from 28 March 2025.

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UBS describes the ASX mining share as the world's largest diversified resources company. BHP's key businesses are iron ore, copper, coal and potash. Its strategy, according to the broker, is to own and operate a portfolio of long-life, expandable assets diversified by commodity, geography and market. The miner's core assets are located in Australia and Chile.

FY25 third quarter update

The company recently gave its quarterly update for the three months to 31 March 2025.

UBS pointed out in a note that BHP's Western Australia iron ore production of 68mt was flat year over year despite weather challenges. It also noted that BHP has achieved record production over the nine months to March 2025, with the port debottlenecking project improving the car dumper and ship loader performance. The rail system is now being improved with the roll-out of the multi-year rail technology (block signalling).

On the copper side of things, its production of 513kt was up 10% year over year and was ahead of expectations, according to UBS. The copper division benefited from a higher grade of copper.

UBS also noted that the Canadian potash project called Jansen had made further progress. Stage one was 66% complete at the end of the quarter and stage two was 8% complete.

Is the BHP share price a buy?

UBS noted it recently reduced its 2025 and 2026 demand and price forecasts for key commodities. This was due to the expected impact of the trade war. The broker said there continues to be significant uncertainty on the full impact on global growth and how China will respond.

The analysts believe there are near-term risks for both the copper and iron ore prices if the commodity market weakens.  

UBS also said that capital expenditure (with a focus on copper) is going to ramp-up from $8.8 billion in FY24 to around $10 billion in FY25, then $11 billion in the medium-term. Net debt is guided to be at the top end of the range of $5 billion to $15 billion by the end of FY25. With that in mind, the dividend for owners of BHP shares is "likely to be in focus" according to UBS.

The broker is expecting BHP to maintain a 50% dividend payout policy with its FY25 result in August, while also providing more detail on how it can "flex" its capital expenditure in the medium-term.

UBS' final analytical point was that potential acquisitions remain both a potential risk and a possible catalyst.

The broker has a price target of $40 on the BHP shares, which implies a possible rise of close to 10%. UBS has a neutral rating on BHP, with a forecast of US$9.9 billion of net profit for FY25 and a possible annual dividend of US 98 cents.

At the current level, the BHP share price is trading at a forward price/earnings (P/E) ratio of around 12, according to UBS.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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