Macquarie analysts are optimistic about the BHP Group Ltd (ASX: BHP) share price. Why are they excited about the future of the BHP share price?
BHP share price
Macquarie prediction
Analysts from Macquarie believe current iron ore prices will enable BHP to post record earnings before interest, taxes, depreciation and amortisation (EBITDA explained) for FY21.
According to the Australian Financial Review, analysts said, “We expect BHP to report underlying EBITDA and earnings of $US34.7 billion and $US15.8 billion, respectively, for financial year 2021. This rises to $US38.0 billion and $US17.7 billion at spot prices.”
If BHP does reach the estimated record EBITDA, it would beat the $US37.1 billion recorded ten years ago for FY11.
Another reason for Macquarie’s assertion is the additional mine capacity that will provide improved operational flexibility.
As a result, Macquarie has maintained its ‘outperform’ rating on the iron ore company.
My thoughts
BHP’s main rival, Rio Tinto Limited (ASX: RIO) stands to also benefit from the current iron ore prices.
However, as outlined by my colleague, Jaz Harrison in her article on BHP, such businesses operate in a price-taking market.
As part of the Rask Investment Philosophy, I prefer to find businesses that are capable of being price makers.
In saying this, BHP may be a sound ASX dividend share given it increased its dividend by 55% in the HY21 results.
