Citi has lifted its valuation on BP (LON:BP), pointing to the company’s ‘soft signals’ of a rise in dividend, WebFG News reports. The comments came after the blue-chip group updated investors on its performance yesterday, revealing a rise in profits for 2017 as it benefited from stronger oil prices.
BP’s share price has jumped in London in today’s session, having added 2.64 percent to 487.55p as of 14:38 GMT. The shares are outperforming today’s rally in the broader UK market which has seen the benchmark FTSE 100 index add 1.41 percent to 7,242.18 points so far today.
Citi lifts valuation on oil major
Citi hiked its price target on BP by six percent to 510p today, while maintaining its ‘neutral’ rating on the shares. WebFG News quoted the analysts as pointing to ‘soft signals’ of a rise in dividend by the company, which, they argue, should come as some comfort for shareholders following 14 straight quarters with an unchanged payout.
“Cash returns (CROCI) of 4.2 percent still lag peers by 170 bps, but delivery on forward plans should see BP catch up by 2020,” they explained.
Investment trust manager hails results
The analyst comments came after BP revealed yesterday that its underlying replacement cost profit had soared to $6.2 billion last year, from $2.6 billion in the prior-year period. Citywire reported that Simon Gergel, manager of the Merchants investment trust, had hailed the oil major’s results.
“Annual results from BP show that the business has been transformed in the last few years, to cope with lower oil prices,” he pointed out, as quoted by the newswire, saying that dividend payments from the oil giant were now looking more secure, “underpinned by underlying cash flows in the business”.