Morgan Stanley has lifted its rating on BP (LON:BP), pointing to a new cycling building for oil majors, Proactive Investors reports. The comments came after Goldman Sachs recently reaffirmed the FTSE 100 group as a ‘buy,’ arguing that that the group was ‘on the cusp of’ delivering one of the industry’s strongest pipelines of new oil and gas projects.
BP’s share price fell in the previous session, giving up 1.19 percent to close at 546.30p, largely in line with losses in the broader UK market, with the benchmark FTSE 100 index giving up one percent. The group’s shares have added a little over 22 percent to their value over the past year, as compared with about a 0.1-percent gain in the Footsie.
Morgan Stanley lifts rating on BP
Morgan Stanley lifted its stance on BP from ‘equal weight’ to ‘overweight’ yesterday and hiked its price target on the shares from 680p to 695p.
“BP has underperformed in recent months as investors have digested the BHP acquisition,” the analysts pointed out, as quoted by Proactive Investors, adding, however, that the company increasingly stood out “amongst European majors, offering the highest dividend yield and underappreciated FCF growth prospects”.
Focusing on the broader sector trend, the broker further noted that while upstream capex had halved since 2013 amid the oil price collapse, historical evidence showed that “rising operating cash flow consistently leads to rising capex, and this seems likely once again”.
Other analysts on blue-chip group
JPMorgan Chase & Co, which rates BP as a ‘buy,’ set a price target of 650p on the shares. According to MarketBeat, the blue-chip oil major currently has a consensus ‘buy’ rating and an average price target of 617p.