BofA Securities raised its price target on BHP Group PLC to AUD57.00 from AUD56.00 on Tuesday, and kept a Buy rating on the company's stock. The adjustment follows revisions to the bank's coal price forecasts, which its commodity team says are being pressured upward by a combination of supply disruptions and demand-side dynamics.
BHP shares are trading at $67.77, roughly 1% below their 52-week high of $69.10, and have returned 30.29% over the past six months. InvestingPro data cited by market sources indicates the stock is trading slightly above its Fair Value estimate.
BofA signalled that its forecast changes were driven by potential challenges to Indonesian coal exports this year, including the possibility of output cuts of up to 200 million tonnes, the imposition of export duties and logistical constraints that could tighten seaborne supplies.
The bank also cited demand-side support for global seaborne coal prices. In particular, BofA highlighted China’s anti-involution policies, energy security measures and a tendency toward "just in case" stockpiling as factors that could underpin higher coal prices.
On a more granular level, BofA raised its 2026 average Newcastle coal price forecast to $123 per tonne, up from $109 per tonne, and increased its Australian hard coking coal (HCC) forecast to $235 per tonne from $186 per tonne. Those higher commodity assumptions contributed directly to the modest upward revision in the firm’s BHP price objective.
Beyond the commodity outlook, BHP has moved to restructure an element of its Western Australia power footprint. The company has agreed to sell a 49% stake in the inland power network that supplies its Western Australia iron-ore business to BlackRock’s Global Infrastructure Partners for $2 billion. The transaction will establish a trust entity to hold the inland power infrastructure, with BHP retaining a 51% controlling stake.
Under the terms disclosed, BHP will pay the trust a tariff tied to its share of the inland power usage for Western Australia Iron Ore over a 25-year period. The arrangement is described by BHP as part of ongoing portfolio optimisation and efforts to improve operational efficiency.
The involvement of BlackRock’s Global Infrastructure Partners in the deal illustrates continued investor interest in infrastructure assets. Market participants note that the structure leaves BHP with majority control while monetising a portion of its power infrastructure and locking in a long-term tariff arrangement.
Analysts and investors said they will watch how the revised coal price assumptions and the infrastructure transaction influence BHP’s financial metrics and operating cash flow in the coming years. For now, BofA’s updated commodity outlook has translated into a small increase in the bank’s valuation for the miner.
What this means
- BofA’s higher coal forecasts have supported a higher price target for BHP, reflecting the direct exposure of the company to coal markets.
- The sale of a material minority stake in the inland power network to Global Infrastructure Partners monetises an asset while keeping operational control within BHP’s remit.
- Investors will monitor both commodity price execution and the financial impact of the power transaction over the medium term.