On Wednesday, UBS analyst Henri Patricot adjusted the price target for BP (LON:BP) Plc. (NYSE:BP:LN) (NYSE: BP), increasing it to GBP5.25 from the previous GBP5.00, while reaffirming a Buy rating on the shares. The adjustment reflects a 5% increase in the price target, as Patricot anticipates a faster rate of deleveraging for the energy company. According to InvestingPro data, BP currently trades at an EV/EBITDA ratio of 3.39x and shows a GOOD overall financial health score.
BP’s stock has seen a significant rise of approximately 25% since the lows experienced in November, with a notable 16.88% gain year-to-date. This uptick is largely attributed to growing expectations for a strategic overhaul, which is anticipated to be announced at the upcoming Capital Markets Day on February 26. Patricot highlights that the forthcoming event is a crucial initial step in enhancing market sentiment towards BP. The company maintains an impressive 5.5% dividend yield and has maintained dividend payments for 33 consecutive years. InvestingPro subscribers can access 12 additional investment tips and comprehensive analysis for BP.
The analyst pointed out that BP’s valuation is currently on par with its industry peers, yet the company holds potential for more earnings growth. This potential is seen as stemming from internal improvements, the possibility of higher than expected trading estimates, and additional value that could be realized through various transactions.
Patricot’s analysis suggests that BP’s efforts in restructuring and financial management are expected to contribute positively to the company’s value. The market is closely watching the upcoming Capital Markets Day for further details on BP’s strategic plans and their impact on future growth and profitability.
In other recent news, BP’s earnings before interest, tax, depreciation, and amortization (EBITDA) for 2024 came in at $38 billion, falling short of the company’s target of $40.9 billion. As a result, bonuses for senior executives were reduced to 45% of the target. In a significant business move, BP plans to invest between $20 billion and $25 billion in the redevelopment of four oil and gas fields in Kirkuk, Iraq, indicating potential for future foreign investment in Iraq’s energy sector.
The company also announced a delay in its plans to produce renewable fuels at the former Kwinana oil refinery in Australia to enhance capital efficiency. In a bid to cut costs, BP also revealed plans to eliminate 7,700 jobs, including 4,700 internal positions and 3,000 contractor roles.
In a positive development, BP initiated gas flow at the Greater Tortue Ahmeyim (GTA) Phase 1 project, a significant step towards unlocking Mauritania’s and Senegal’s gas resources. The project is predicted to produce approximately 2.3 million tonnes of LNG annually, meeting global energy needs. These are some of the recent developments shaping BP’s operational and financial landscape.
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