BP share price: Analysts weigh in on oil major's results

Hargreaves Lansdown says group’s Q1 headline profits look strong

BP share price: Analysts weigh in on oil major's results

Hargreaves Lansdown sees BP (LON:BP) on the road to recovery, Citywire has reported. The comments follow the oil major’s first-quarter results yesterday which showed that the group had grown profits in the first three months of the year on the back of stronger crude prices. The company also disclosed that its Gulf of Mexico oil spill payments in the quarter were $1.6 billion on a pre-tax basis, including $1.2 billion for the final payment relating to the 2012 Department of Justice settlement. 

BP’s share price rose on the back of the results, gaining 1.80 percent to close at 547.70p, outperforming the broader UK market. The group’s shares have added nearly 24 percent to their value over the past year.

BP on road to recovery

Citywire quoted Hargreaves Lansdown analyst Nicholas Hyett as commenting yesterday that BP’s headline profits looked strong and “just as importantly, those profits are being converted to cash” although the oil major was “seeing more demand on that cash than most” thanks to Deepwater Horizon compensation, sustaining its dividend, and a share buyback programme.

“It also has a growing debt pile to repay,” the analyst continued, adding, however, that “improving conditions, declining Gulf of Mexico costs, and some dramatic increases in upstream production mean the future looks brighter”.

Hyett further reckons that BP’s dividend looks increasingly secure, and if the group’s “net debt goes into decline next quarter, then BP will be well and truly on the road to recovery”.

Other analysts on group

Royal Bank of Canada lifted its rating on BP to ‘outperform’ yesterday, without specifying a price target on the shares. According to MarketBeat, the oil major currently has a consensus ‘hold’ rating and an average price target of 547.70p.

As of 08:08 BST, Wednesday, 02 May, BP plc share price is 427.88p.

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