RBC Capital Markets upgraded its rating on BP (BP.L) to outperform from sector perform, viewing the current commodity price environment as another opportunity for the company to deleverage and "restore financial health."
"We have been critical of BP's capital allocation over recent years, across both its transition efforts and decisions made in its core business. Looking forward, another unexpected windfall gives BP another chance to put the business on firmer footing. Given material damage on energy infrastructure in the Middle East as well as material inventory drawdowns across oil products, we see a period of prolonged higher commodity prices supporting BP's investment case," analysts said Monday. "We see the combination of strong commodity prices, recent exploration success and new management providing an opportunity to restore investor confidence."
As such, the research firm made "small" adjustments to its forecasts, mainly related to the oil and gas major's downstream operations. EPS projections for 2026 and 2027 were increased by 2.2% and 5.4%, respectively, while the estimate for 2028 was bumped down 0.7%.
The stock's price target was left unchanged at 7 pounds sterling.