Why Are Most Analysts Recommending ‘Hold’ for BP?



Analyst recommendations for BP

In this series, we’ve looked at BP’s (BP) 1Q16 earnings, segment performance, stock performance, capital expenditure, costs, and divestment position. In this part, we’ll examine the ratings of analysts covering the stock.

The above table shows that three out of ten companies surveyed rated BP a “buy” or “outperform.” The highest 12-month price target for BP stands at $43, indicating a 26% rise from its current levels. The remaining seven companies have rated BP a “hold.” The average 12-month price target for BP is $37, indicating an 8% rise from its current levels.

None of the companies in the above table gave BP a “sell” rating. The lowest 12-month price target for BP stands at $31, implying a 9% fall from its current level.

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Evercore ISI gave BP its highest price target, while Jefferies gave it the lowest. Cowen, AllianceBernstein, and Scotia Howard Weil have given BP price targets that are equal to or more than $38 per share. Goldman Sachs, Raymond James, Piper Jaffray, and Edward Jones have given “neutral,” “hold,” or “market perform” recommendations to the stock.

Analyst ratings for BP’s peers

BP’s peers PetroChina (PTR), Cenovus Energy (CVE), and Imperial Oil (IMO) have “buy” ratings from 25%, 42%, and 10%, respectively, of analysts surveyed. If you’re looking for exposure to value stocks, you can consider the PowerShares Dynamic Large Cap Value ETF (PWV). PWV has ~11% exposure to energy sector stocks.


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