Why are BHP shares down?

The Australian mining giant’s latest less-than-stellar production update brought the stock's recent rally to an abrupt halt.

  • BHP (ASX: BHP) share price fell to A$38.39 on Tuesday (19 October)
  • The mining play reported lower copper and iron ore production volumes for the September-ending quarter
  • Analysts are largely optimistic about the stock, which is up 2.3% in the last one month
  • Keen to take advantage of BHP’s rising share price? Open an account with us to long the stock now.

BHP stock price: what’s the latest?

BHP shares closed 2% lower on Tuesday, after it reported a year-on-year decline in copper and iron ore production for its latest financial quarter.

Copper production dropped 9% in the September-ending quarter against the same period a year ago, while iron ore production fell 4% from September 2020.

The group said lower copper volumes were experienced at the Olympic Dam, due to the commencement of a planned smelter maintenance campaign, which led to a one-month delay on top of Covid-19 related border restrictions.

Iron ore production figures were also due to planned major maintenance, including car dumper one and the impacts of temporary rail labour shortages caused by pandemic-related border restrictions.

Nevertheless, BHP guided that copper production for the full 2022 financial year remains unchanged at between 1,590 kilo tonne (kt) and 1,760 kt. Iron ore guidance for the year also remains unchanged at between 249 mega tonne (mt) and 259 mt.

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How do analysts currently view BHP?

The stock is up 2.3% in the last one month, but down 11% year to date.

Shares have been rising of late, thanks to rallying iron ore prices.

Eight analysts recommended ‘buy’ on the Australia-listed counter as of mid-October 2021, with five rating it ‘hold’, and none giving ‘sell’ calls. Their average price target was A$47.89, Bloomberg data showed.

On Monday (11 October), Bernstein and Macquarie both gave ‘outperform’ ratings, alongside targets of A$45 and A$56 respectively.

Deutsche Bank suggested BHP was a ‘buy’ in the short term, as the counter had ‘materially lagged’ its peers since mid-August. ‘We’ve been surprised by the underperformance given the powerful rally in energy and coking coal prices in recent weeks,’ the analysts wrote.

However, they pointed out that near-term downside risks included declining commodity prices and a strong US dollar.

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