BP share price: Credit Suisse turns bullish on oil producer

on Dec 2, 2016
Updated: Oct 21, 2019

Credit Suisse has turned bullish on BP (LON:BP), pointing to the oil major’s valuation, and progress made on capital productivity and efficiency. The comments are a boost for the FTSE 100 group which is currently battling alongside peers with the ongoing weaker oil price environment.

BP’s share price closed higher in the previous session, adding 2.31 percent to 470.05p, propped up by Wednesday’s deal by OPEC and Russia to curb a global supply glut. The stock outperformed the blue-chip FTSE 100 index which shed 30.86 points to close 0.45 percent lower at 6,752.93. The group’s shares have gained nearly a third this year, as compared with about an eight-percent rise in the Footsie.

Credit Suisse lifted its stance on BP from ‘neutral’ to ‘outperform’ yesterday, and hiked its valuation on the shares from 480p to 500p, pointing to progress made on capital productivity and efficiency as presented at the recent field trip in Baku. The analysts explained that as a result, the oil major had a better-than-expected cash cycle, which somewhat de-risks dividend sustainability. It also had a larger-than-expected resource base that can be commercially developed, thereby reducing the risk of/need for bigger M&A.

“Since the Baku trip, we have somewhat more confidence on the longer term sustainability of the business, albeit we still view its portfolio depth and quality in need for improvement,” the bank said, as quoted by Sharecast.
BNP Paribas also remains bullish on BP, reiterating its ‘outperform’ stance on the group yesterday, with a price target of 250p. Independent Research GmbH, which rates the company as a ‘buy,’ set a valuation on the shares of 550p. As of November 26, the consensus forecast amongst 28 polled investment analysts covering BP for the Financial Times also has it that the company will outperform the market.
As of 07:51 GMT, Friday, 02 December, BP plc share price is 472.92p.

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