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FINWIRES

RBC Revises Price Target, Estimates for BP After Q1 Trading Update

-- RBC adjusted its price target and earnings forecasts for BP (BP.L), amid a model update to incorporate the oil and gas giant's first-quarter trading update and the research firm's revised commodity price deck.

"1Q trading update reflects stronger oil trading and modest uptick in macro. We update our estimates for BP's trading update, which reflects a significant working capital build from higher commodity prices, 'exceptional' oil trading and a small uplift in refining margins. Our updated EBIT/RCOP estimate is $6.09bn is ahead of consensus at $5.81bn and our updated net income estimate is $2.99bn is also higher than consensus at $2.67bn. Note that like with peers, the full effect of stronger commodity prices will be seen from 2Q onwards," analysts said Wednesday.

As such, the research firm raised the sector perform-rated stock's price target to 7 pounds sterling from 6.40 pounds. The upgrade reflects the higher commodity price deck alongside an $80 per barrel long-term Brent assumption.

Concurrently, RBC noted that investor focus is shifting to first-quarter results due on April 28, with comments from BP's new Chief Executive Officer Meg O'Neill to be "keenly watched." Analysts anticipate management to prioritize de-leveraging in the near term to fund future growth cycles, while a restart of a share buyback program is not expected.

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