RBC Capital Markets anticipates BP's (BP.L) balance sheet improvement will pick up and be "more comparable" to peers within 12 months, citing "a strong macroeconomic tailwind" and the London-listed oil major's divestment strategy.
"BP's expanded net debt position improved by ~$7bn qoq, and we expect de-leveraging to accelerate into 2H26, through the combination of a supportive macro, including higher refining margins, as well as divestments. Interestingly, BP is being more selective on the divestment front, and this is more than offset by underlying cash generation being significantly higher than expectations at the start of the year. Assuming forward curve pricing for the year, our 2026 CFFO expectation is some ~$11bn higher than what we envisaged at the start of the year, with it all going to the balance sheet," the research firm said Tuesday.
Analysts added that they expect a "more refined" midterm growth strategy from BP by early 2027, while forecasting a restart of share buybacks in the second quarter of the same year.
Against this backdrop, the research firm trimmed its net production and operating diluted EPS assumptions for full-year 2026 to 2028. RBC still rates the stock at outperform, with a price target of 7 pounds sterling.