Should you buy BHP shares in FY27? This is what experts think

BHP Group Ltd (ASX: BHP) shares ended last week 1.5% higher, climbing back above the $60 mark after recovering from a weak June.

While the mining giant lost around 6% during the month, the stock is still up an impressive 58% over the past 12 months.

So, where do brokers see BHP shares heading in FY27, and are they still worth buying today?

What do the experts think?

After a stellar 12-month run, analysts have become more measured on BHP shares. Most brokers now have a hold recommendation on the mining stock. They seem to suggest that much of the recent optimism is already reflected in the share price.

According to consensus estimates, the average 12-month price target sits around 6% above current levels, suggesting analysts still expect modest gains, but not another breakout year.

Morgan Stanley remains among the more bullish brokers. Last week, the investment bank reaffirmed its buy rating on BHP shares and maintained a 12-month price target of $67.50. That implies upside of more than 10% from current levels, excluding dividends.

For income-focused investors, BHP’s sizeable dividend payments could further enhance total returns if commodity prices remain supportive.

Why BHP remains a quality miner

BHP continues to stand out as one of the world’s highest-quality diversified mining companies.

Its portfolio spans iron ore, copper, potash and metallurgical coal, giving investors exposure to commodities that are expected to play an important role in global infrastructure spending and the energy transition.

Copper, in particular, has become an increasingly important growth driver. Rising demand from electrification, renewable energy and artificial intelligence-related infrastructure is expected to support long-term consumption, and BHP has been investing heavily to expand its exposure to the metal.

Meanwhile, its low-cost iron ore operations in Western Australia continue to generate strong cash flows, providing the financial strength to invest through commodity cycles while rewarding investors in BHP shares with dividends.

Why did BHP shares fall in June?

Despite its strong long-term performance, BHP shares came under pressure during June.

The decline largely reflected weaker iron ore prices, as investors became increasingly concerned about slowing steel demand in China. Continued uncertainty surrounding China’s property sector and broader economic growth also weighed on sentiment across the mining sector.

The company also disappointed investors in June with another cost blowout at its Jansen potash project. That and some profit taking likely added to the selling pressure.

However, the pullback proved short-lived, with BHP shares regaining momentum and reclaiming the $60 level last week.

The risks to watch in FY27

While BHP remains well positioned over the long term, investors should be aware of several risks. Commodity prices remain the biggest variable. A sustained decline in iron ore or copper prices would likely pressure earnings and dividends.

China also remains a critical market for BHP, meaning any further slowdown in construction activity or industrial production could affect demand.

In addition, large mining projects face ongoing risks from cost inflation, operational disruptions and regulatory changes.

Even so, BHP’s strong balance sheet, diversified asset base and disciplined capital allocation leave it well placed to navigate periods of market volatility.

With analysts expecting further, albeit more modest upside, BHP shares could still appeal to long-term investors seeking exposure to high-quality mining assets and reliable dividend income in FY27.

The post Should you buy BHP shares in FY27? This is what experts think appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has positions in BHP Group. 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.