Upstream Breakthroughs And Cost Cuts Will Reshape Global Energy Markets

Analysts have raised BP’s price target from £4.44 to £4.51, citing improved earnings, a positive outlook on upstream growth after the Bumerangue Block discovery, and confidence in valuation convergence with peers.

Analyst Commentary

• Bullish analysts cite BP’s attractive valuation relative to European supermajor peers, expecting the valuation gap to narrow.
• Upgrades and raised price targets reflect strong recent earnings, supported by better-than-expected margins, robust operations, and trading outperformance.
• Positive outlook on BP’s upstream growth prospects, particularly following the Bumerangue Block discovery, seen as transformative for the long-term profile.
• Analysts note confidence in BP’s cost reduction efforts and progress on sustainable shareholder returns, including medium-term refining improvements.
• Raised price targets are underpinned by a distinctive mix of growth opportunities, deep resource base, and improved sector outlooks for integrated oil companies.

What's in the News

• OPEC+ will boost oil output by 137,000 barrels per day in October, raising concerns about a potential supply glut and downward pressure on oil prices; BP is among publicly traded companies affected (WSJ).
• Elliott Investment Management, a major BP shareholder, has called on new chairman Albert Manifold to urgently improve BP's cost base and capital allocation, citing chronic operational under-performance (Bloomberg).
• Elliott emphasizes the need for decisive and effective leadership at BP to facilitate a turnaround and address existing shortcomings (Bloomberg).

Valuation Changes

Summary of Valuation Changes for BP

• The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from £4.44 to £4.51.
• The Consensus Revenue Growth forecasts for BP has significantly risen from -2.3% per annum to 4.2% per annum.
• The Future P/E for BP has significantly fallen from 11.59x to 8.17x.