Hold Rating on BP: Awaiting Catalyst Amid Underperformance and Strategic Challenges

BP (BP – Research Report), the Energy sector company, was revisited by a Wall Street analyst yesterday. Analyst Roger Read from Wells Fargo maintained a Hold rating on the stock and has a $30.00 price target.

Roger Read’s rating is based on BP’s current valuation and performance relative to its peers. Over the past three years, BP’s shares have significantly underperformed compared to major competitors like Shell, ExxonMobil, and Chevron, as well as the broader market index, the SPX. This underperformance is reflected in BP’s shares trading at a discount on several valuation metrics, including EV/EBITDA, P/E, and P/DACF, when compared to international oil company peers.
Despite the presence of activist shareholder Elliott Investment Management, which could potentially act as a catalyst for positive change, there is uncertainty about the specific actions Elliott might take to enhance shareholder value. While an outright breakup of BP’s operations could potentially lead to a significant valuation uplift, the lack of a concrete plan from Elliott and BP’s current strategic and financial challenges lead to the Hold rating. This rating suggests a wait-and-see approach as potential future developments could influence BP’s valuation and performance.

According to TipRanks, Read is a 4-star analyst with an average return of 3.9% and a 51.71% success rate. Read covers the Energy sector, focusing on stocks such as Suncor Energy, Conocophillips, and Phillips 66.