BP plc: RBS and Jefferies have differing views on where the BP share price is headed

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Category: BP

Published on Tuesday, 18 October 2011 08:52

Written by Will Peters

The brokers take a look at BP in the wake of the Anadarko settlement.

BP plc (LON:BP) is a Buy at Royal Bank of Scotland Group plc (LON:RBS) after analysts took a positive view of the recent settlement reached with Anadarko over financial liabilities for the Macondo well disaster.

However, analysts at Jefferies are notably more sanguine about the likely trajectory of the BP share price.

RBS

RBS have BP at a Buy rating, a target price is set at 593.

David Cline, analyst at RBS says:

"This settlement is another important hurdle crossed on the road to normality at BP, in our view. Also, it should reflect well on much-maligned management.




"Progress towards resuming normal drilling activities in the deepwater Gulf of Mexico is the next catalyst to look for, in our view. This could include approval by the US offshore regulator (BOEMRE) of the previously submitted multi-well drilling plan for the Kaskida area or the first award of a drilling permit to a BP-operated well."

Jefferies

Jefferies have BP plc on a Hold rating with at target price of 425 (where we currently find the share price).

The Jefferies case is focused on events outside of Macondono:

"Outside of Macondo, BP still needs to deliver a growth strategy following the collapse of its Russian deal with Rosneft and the questions raised over the growth potential of the Reliance assets it recently farmed into.

"The stock remains at the bottom of the global major valuation range, on a 30% PER discount in 2012, and although we think a final Macondo settlement would continue to close this gap, BP needs a credible growth strategy to restore it to its pre-Macondo rating. Hence we are maintaining our Hold rating and 425p price target at present."