Berenberg has initiated coverage of BP (LON:BP) with a ‘buy’ rating, as it looked at the oil sector. The Financial Times reports that the analysts argue that oil stocks trade at a 20 percent discount to the average.
BP’s share price has fallen into the red in today’s session, having given up 0.55 percent to 535.53p as of 14:40 BST. The decline is in line with broader UK market, with the benchmark FTSE 100 index currently standing 0.54 percent lower at 7,240.31 points. The group’s shares have added just under a fifth to their value over the past year, as compared with about a 2.4-percent dip in the Footsie.
Berenberg sees BP as ‘buy’
Berenberg started coverage of BP with a ‘buy’ rating today, with a price target of 665p on the shares. The FT quoted the analysts as saying that oil stocks trade at a 20 percent discount to the average with investors pricing in $60 Brent for the longer term, so $65 a barrel would imply eight percent upside on average.
The broker further pointed out that BP was “finally emerging from the shadow of the Deepwater Horizon oil spill and is starting to grow again,” adding that “an attractive dividend yield, operational excellence and management focus on value creation can drive upside in the stock”.
Other analysts on oil major
Barclays reaffirmed BP as an ‘overweight’ today, with a price target of 705p on the shares, while JPMorgan Chase & Co, which also sees the oil major as an ‘overweight,’ lowered its valuation on the stock from 650p to 625p. According to MarketBeat, the blue-chip group currently has a consensus ‘buy’ rating and an average price target of 618.10p.