With global inflationary pressures and volatile commodity pricing plaguing the Resources sector, Morgans considers BHP Group offers the best risk/reward proposition in the sector.

Ahead of the June operational result on July 20 and FY23 earnings result on August 22, the broker raises its target to $51.70 from $50.40 after allowing for the Oz Minerals acquisition. Lower iron ore pricing assumptions are also adopted and the financial model rolled forward.

The analyst expects healthy Pilbara shipments will be the key driver of the Q4 operational result. A special dividend is considered unlikely with the company still digesting the Oz Minerals acquisition. The Add rating is retained.

Sector: Materials.

Target price is $51.70.Current Price is $45.52. Difference: $6.18 - (brackets indicate current price is over target). If BHP meets the Morgans target it will return approximately 12% (excluding dividends, fees and charges - negative figures indicate an expected loss).

© 2023 Acquisdata Pty Ltd., source FN Arena