The BHP share price is tumbling today, but here’s why Macquarie is bullish

It’s a rough day on the market for the BHP Group Ltd (ASX: BHP) share price as the S&P/ASX 200 Index (ASX: XJO) crumbles under the weight of Wall Street.

New York-based indexes tumbled overnight amid the release of hotter-than-expected inflation data.

And their suffering is dragging on the Aussie bourse. The ASX 200 is down 2.72% shortly after open while the S&P/ASX 200 Materials Index (ASX: XMJ) has dumped 2.65%.

The BHP share price hasn’t managed to escape the carnage. It’s trading at $38.52 right now, 1.98% lower than its previous close.

But top broker Macquarie has doubled down on the stock, reportedly upping its price target for BHP shares by 5%. However, others have taken a swing at iron ore.

Let’s take a closer look at what brokers are expecting from the ASX 200 materials giant.

Top broker tops 9% upside for BHP share price

The BHP share price is suffering amid a broader market downturn on Wednesday despite bullish sentiments from a top broker.

Macquarie has upped its expectations of coking coal – otherwise known as metallurgical coal – and companies that produce it, The Australian reports.

The broker is said to have lifted its expectations for the commodity’s value to US$350 a tonne in 2023 and boosted its long-term forecast to US$200 a tonne. Though, it has also reportedly dropped its forecast for the December quarter to US$310 a tonne.

Its bullish outlook is reportedly due to an underinvestment in supply and India’s dependency on coal imports and comes despite falling demand for steel.

BHP’s coal segment brought in US$15.5 billion of revenue last financial year. It saw an average realised price of US$347.10 per tonne of coking coal – a 225% year-on-year improvement.

On the back of its bullish outlook for coal, Macquarie has reportedly lifted its price target for BHP shares 5% to $42. That represents a potential 8.94% upside.

On a less positive note, however, Fitch Solutions has dropped its near-term expectations for iron ore, the Australian Financial Review reports.

The firm is said to have dropped its outlook for 2022’s average iron ore price by US$15 to US$115 a tonne.

That’s expected to fall to US$100 a tonne in 2023, and by an additional US$10 a tonne every year thereafter until 2025.

Its bearish expectations are reportedly due to recovering inventories and slowing growth in major economies.

The post The BHP share price is tumbling today, but here’s why Macquarie is bullish appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper 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 Macquarie Group Limited. 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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