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BP Stock: Pre-Earnings Price Forecast

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Apr. 27 2018, Updated 9:01 a.m. ET

BP’s implied volatility

In this part, we’ll discuss BP’s (BP) stock price forecast range for the 11-day period until its earnings. BP is expected to post its 1Q18 earnings on May 1. The price range forecast will be based on the current implied volatility in BP.

BP’s implied volatility has risen by 6.2 percentage points since January 2 to the current level of 20.5%. During the same period, BP stock has risen 2.6%.

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Expected price range

Considering BP’s implied volatility of 20.5% and assuming a normal distribution of prices (bell curve model) and standard deviation of one (with a probability of 68.2%), BP’s stock price could close between $45.0 per share and $42.0 per share in the 11-day period ending on May 1.

Peers’ implied volatilities

Like BP, the implied volatility in Petrobras (PBR) and PetroChina (PTR) has risen by 7.3 percentage points and 3.3 percentage points, respectively, since January 2. Currently, the implied volatility in Petrobras and PetroChina stands at 37.6% and 25.6%, respectively. The implied volatility in Statoil (STO) has risen by 2.5 percentage points since January 2 to the current level of 21.9%. Statoil’s stock price has risen 16.4% since January 2. Petrobras and PetroChina’s stock prices have risen 33.6% and 3.7%, respectively, during the same period.

The SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY) have seen their implied volatilities rise by 5.3 percentage points and 6.2 percentage points, respectively, since January 2. Currently, DIA and SPY’s implied volatilities stand at 13.7% and 13.1%, respectively. Since January 2, DIA and SPY have seen their values fall 1.4% and 0.8%, respectively.

Next, we’ll discuss how analysts rate BP before its 1Q18 earnings.

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