Does Macquarie rate BHP shares a buy, hold or sell right now?

BHP Group Ltd (ASX: BHP) released its operational review for the past financial year this week, and it's fair to say reaction from analysts has been muted, with the company guiding to a drop in copper production this year.

Are BHP shares fully priced at the moment?

BHP shares are up slightly more than 50% for the past 12 months, so given that strong result, it begs the question, do they have further to run?

The team at Macquarie have run the ruler over the company and come up with a neutral recommendation on the stock, and a share price target we'll get to shortly.

First, let's look at what BHP reported this week.

Solid operational results

The company said in a statement to the ASX that it had delivered record iron ore production over the year to the end of June, up 1% to 264.7 million tonnes.

Copper, however, was 3% lower than the previous year at 1.95 million tonnes.

BHP Chief Executive Officer Brandon Craig said it was a solid result.

He added:

For the second consecutive year, we produced around 2 Mt of copper and delivered record iron ore production, demonstrating the power of a disciplined operating system and world-class assets. We achieved this against a backdrop of stronger realised prices for both copper and iron ore, with copper prices around 35 per cent higher than a year ago. Cost control was particularly strong, with every asset expected to be within unit cost guidance despite headwinds from inflation, higher diesel prices and global supply chain disruptions.

While Mr Craig said the company had several growth projects underway, BHP is actually guiding to lower copper output this year, with a forecast of 1,650,000 to 1,800,000 tonnes of copper.

Iron ore is expected to stay largely flat at 260 to 272 million tonnes.

Copper output has been impacted by a conveyor belt failure at the Carrapateena mine, impacting output at the company's South Australian operations for up to eight weeks.

Let's see what the analysts think

The Macquarie team said in their note to clients that much of BHP's value proposition was built on copper growth, and that South Australia was a key part of that.

They applauded the company's record iron result however, in what they said had been a tough year.

But Macquarie said with the risk of strikes looming and significant maintenance work scheduled, they expected it to be a "holding year" for the division.

Macquarie has a 12-month price target of $55 on BHP shares compared to $59.14 at the time of writing. They are also predicting the dividend yield to stay steady on 3.4%.

The post Does Macquarie rate BHP shares a buy, hold or sell right now? appeared first on The Motley Fool Australia.

Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has recommended BHP Group and Macquarie 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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