Update shared on27 Aug 2025
Fair value Increased 3.61%Consensus analyst reasoning reflects cautious optimism for BHP Group, as improved underlying fiscal results and modest upgrades to revenue forecasts are tempered by ongoing execution risks, cost inflation, and less compelling valuation following a share price rally—resulting in a moderate increase in the analyst price target from A$41.44 to A$42.94.
Analyst Commentary
- Bearish analysts pointed to execution risk related to significant cost overruns (“cost blow out”) at Jansen Stage 1, weighing on future outlook.
- Valuation perceived as less compelling after recent share price rally, with lower free cash flow yields and shares reaching revised target ranges.
- Normalized but still-elevated inflationary pressures and higher overall cost base compared to pre-pandemic levels contribute to cautious sentiment.
- Dividend surprise in FY25 seen as unlikely to be repeated, tempering expectations for extraordinary shareholder returns.
- Bullish analysts cite solid underlying fiscal results and certain price target increases, but with generally more measured optimism, reflecting both positive quarterly beats and offsetting execution and cost concerns.
What's in the News
- BHP is leading a consortium of steelmakers and industrial firms, including ArcelorMittal, Nippon Steel India, JSW Steel, Hyundai Steel, Chevron, and Mitsui, to explore carbon capture utilization and storage (CCUS) opportunities across China (Bloomberg).
- BHP and Vale have offered approximately $1.4 billion to settle a UK class action lawsuit tied to the Mariana dam disaster in Brazil, including $800 million in victim compensation and $600 million for legal fees, while the claimants' firm is seeking about $3 billion (Financial Times).
- Law firm Pogust Goodhead has filed a London lawsuit accusing BHP and Vale of attempting to avoid paying $1.7 billion in legal fees related to settlements over the 2015 Mariana dam collapse (Reuters).
- Former BHP Group Chair Ken MacKenzie is among the candidates being considered for the chairmanship of BP, alongside former Centrica CEO Sam Laidlaw (Sky News).
Valuation Changes
Summary of Valuation Changes for BHP Group
- The Consensus Analyst Price Target has risen slightly from A$41.44 to A$42.94.
- The Future P/E for BHP Group has significantly risen from 16.36x to 26.95x.
- The Consensus Revenue Growth forecasts for BHP Group has significantly risen from -2.7% per annum to -1.0% per annum.
Disclaimer
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