BP’s Outlook: What Do Its Financials Suggest?

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Part 5
BP’s Outlook: What Do Its Financials Suggest? PART 5 OF 17

Analyst Ratings for BP: 50% Gave ‘Buy’ or ‘Strong Buy’ Ratings

Half of the analyst ratings for BP are a “buy”

Of the ten analysts covering BP, five analysts gave “buy” or “strong buy” ratings, four gave “hold” ratings, and one analyst gave a “sell” rating on the stock.

BP’s mean target price stands at $39.00 per share, implying a 2% gain from the current level. Recently, Goldman Sachs upgraded BP’s target price from $38.00 per share to $39.00 per share.

Analyst Ratings for BP: 50% Gave ‘Buy’ or ‘Strong Buy’ Ratings

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BP’s peers Royal Dutch Shell (RDS.A), ExxonMobil (XOM), and Chevron (CVX) were rated as a “buy” by 91%, 33%, and 65% of analysts, respectively. Statoil (STO), Petrobras (PBR), and YPF (YPF) were rated as a “buy” by 20%, 43%, and 85% of analysts, respectively.

BP’s preparation for lower oil prices

BP plans to see sturdy growth that would allow it to face a lower oil price environment. Also, the company plans to grow earnings from its Upstream and Downstream segments.

Strategically, BP plans to lower its capital expenditures (or capex) by $15 billion–$17 billion, cut costs, and divest non-competitive assets by $4.5 billion–$5.5 billion in 2017. BP also anticipates its oil spill charges to be $4.5 billion–$5.5 billion in 2017. 

In 2018, BP’s capex could remain in the range of $15 billion, assuming an average oil price of $50 per barrel. Its divestment proceeds could be $2 billion–$3 billion, and its oil spill charges could stand at ~$2 billion.

With a robust strategy in place, BP could witness improvement in its financial position. Out of seven upstream projects, six have started production on schedule, adding to the company’s overall hydrocarbon production. These analyst ratings for BP could be improving due to BP’s revamped financial framework.

In the next article, we’ll see what analysts expect of BP’s dividend payment in 4Q17.


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