Will Analysts’ Ratings for BP Strengthen?



Analysts’ ratings

After BP’s (BP) first-quarter earnings, 11 analysts rated the company. Six or 55% of the analysts recommended a “buy” or “strong buy” rating, four or 36% recommended a “hold” rating, and one recommended a “sell” rating. BP could see changes in the ratings as analysts drill down the first-quarter numbers. BP’s mean target price is $50 per share, which implies a 15% gain from the current level.

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Will analysts’ ratings for BP strengthen?

BP aims to be competitive at all of the points in an oil price cycle. BP has a strategy in place that includes cutting costs, optimizing the capex, and selling non-core assets. BP plans to spend $15 billion–$17 billion on the capex from 2019 to 2021. The company also aims to divest more than $10 billion worth of assets in the next two years. BP expects its oil spill charges to be ~$2 billion in 2019.

BP has a strong upstream projects pipeline. The company expects its production to rise by 900 thousand barrels of oil equivalent per day by 2021. If oil prices improve, with increasing production BP could see higher upstream earnings. Analysts’ ratings could strengthen as earnings rise and financials improve.

Analysts’ ratings for peers

ExxonMobil (XOM), Royal Dutch Shell (RDS.A), and Chevron (CVX) have been rated as a “buy” by 27%, 82%, and 74% of the analysts, respectively. Suncor Energy (SU), Petrobras (PBR), and YPF (YPF) have been rated as a “buy” by 92%, 70%, and 79% of the analysts, respectively.


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