Jefferies continues to see BP (LON:BP) as a ‘hold’ after the oil giant delivered what the analysts see as ‘solid’ second-quarter results. The comments came as the FTSE 100 group posted a drop in profits, while surpassing analyst expectations and maintaining its payout to shareholders.
Investors reacted positively to the oil major’s results yesterday, sending BP’s share price 2.39 percent higher at 456.45p. The stock outperformed the broader UK market, with the benchmark FTSE 100 index adding 0.70 percent higher to close at 7,423.66 points. The group’s shares have added just under seven percent over the past year, but are down by some 10 percent in the year-to-date.
Jefferies reiterated its ‘hold’ stance on BP yesterday, after the company revealed that its underlying replacement cost profit had come in at $684 million in the second quarter of the year, down from the prior-year period’s $720 million, and from the $1.5 billion posted in the first quarter of the current year. The group’s profit, however, came in at $144 million, as compared with a $1.4-billion loss in the prior-year period.
Citywire quoted the broker’s analyst Jason Gammel as commenting that the results were ‘solid’ in the second quarter, noting that “the underlying growth in the fuels business is encouraging”. He, however, also warned that there might be challenges ahead for the oil giant.
“The company’s ability to de-lever the balance sheet remains a concern,” he pointed out, with BP having ended the quarter with a net debt/capitalisation ratio of 28.8 percent.
As of July 28, the consensus forecast amongst 31 polled investment analysts covering BP for the Financial Times advises investors to hold their position in the company. According to MarketBeat, the oil major currently has a consensus ‘hold’ rating and an average price target of 503.24p.