Is BP Ready for Lower Oil Prices?

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Part 8
Is BP Ready for Lower Oil Prices? PART 8 OF 17

Have BP’s Analyst Ratings Strengthened Its Post-2Q Earnings?

BP’s analyst ratings

Of the ten analysts tracking BP (BP), five (50%) analysts have assigned “buy” or “strong buy” ratings, while four (40%) have assigned “hold” ratings, and one (10%) has assigned a “sell” rating on the stock. BP’s mean target price stands at $38 per share, implying a 5% gain.

Compared to July 2017, BP has received more “buy” ratings and fewer “hold” ratings so far in August 2017. Simmons recently upgraded BP from “neutral” to “overweight.” The firm also raised BP’s target price from $38 per share to $42 per share.

Have BP&#8217;s Analyst Ratings Strengthened Its Post-2Q Earnings?

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Peers ExxonMobil (XOM), Royal Dutch Shell (RDS.A), and Chevron (CVX) have been rated as a “buy” by 31%, 91%, and 65% of analysts, respectively. Global players Statoil (STO), Petrobras (PBR), and YPF (YPF) have been rated as “buy” by 40%, 50%, and 77% of analysts, respectively.

BP’s reducing cash balance point

BP plans to grow in order to face tough times less scathed, and it has a plan of action in place. It plans to grow its earnings from its Upstream and Downstream segments, to lower its capital expenditure or capex between the range of $15 billion–$17 billion, to cut costs, and to divest non-core assets to the tune of $4.5 billion–$5.5 billion in 2017.

BP also expects its oil spill charges to stay between $4.5 billion and $5.5 billion in 2017. After that, in 2018, BP’s capex is likely to stay ~$15 billion, assuming $50 per barrel of average oil prices. It expects its divestment proceeds to be in the range of $2 billion–$3 billion and its oil spill charges to stay at ~$2 billion.

BP’s robust strategy could help it attain a better financial position. Its effort to improve its financials amid the previous lower oil price scenario reflects positively for the company, and so the analyst ratings on the stock are likely improving due to its robust financial framework and earnings growth potential going forward.


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