Stock Analysis

Analysts Are Betting On BP p.l.c. (LON:BP.) With A Big Upgrade This Week

LSE:BP.
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BP p.l.c. (LON:BP.) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's forecasts. The consensus estimated revenue numbers rose, with their view now clearly much more bullish on the company's business prospects. The market seems to be pricing in some improvement in the business too, with the stock up 4.9% over the past week, closing at UK£5.16. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.

After this upgrade, BP's 21 analysts are now forecasting revenues of US$258b in 2023. This would be a modest 4.6% improvement in sales compared to the last 12 months. Before the latest update, the analysts were foreseeing US$198b of revenue in 2023. It looks like there's been a clear increase in optimism around BP, given the great increase in revenue forecasts.

See our latest analysis for BP

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LSE:BP. Earnings and Revenue Growth February 8th 2023

We'd point out that there was no major changes to their price target of US$6.94, suggesting the latest estimates were not enough to shift their view on the value of the business. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on BP, with the most bullish analyst valuing it at US$6.92 and the most bearish at US$5.03 per share. With such a narrow range of valuations, analysts apparently share similar views on what they think the business is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that BP's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 4.6% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 11% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to decline 4.8% per year. So it's pretty clear that BP is expected to grow faster than the wider industry.

The Bottom Line

The highlight for us was that analysts increased their revenue forecasts for BP this year. The analysts also expect revenues to perform better than the wider market. Seeing the dramatic upgrade to this year's forecasts, it might be time to take another look at BP.

That's a pretty serious upgrade, but shareholders might be even more pleased to know that forecasts expect BP to be able to reach break-even within the next few years. For more information, you can click through to our free platform to learn more about these forecasts.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

Valuation is complex, but we're helping make it simple.

Find out whether BP is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.