JPMorgan upgrades BP to 'overweight'

(Sharecast News) - JPMorgan upgraded BP on Wednesday to 'overweight' from 'neutral' and lifted the price target to 675p from 550p.

It noted that BP's recent history has been chequered, with operational inconsistencies, strategic inconsistencies and a balance sheet poison pill.

JPM said its 'overweight' these is centred on balance sheet repair, simplification, renewed long-term upstream growth optionality and a competitive valuation.

The bank said BP's balance sheet is no longer a poison pill. Base case forecasts (2027 Brent $75) project total financial obligations falling 50% by YE27, which takes gearing metrics back in line with EU Oils peers for the first time this decade, it said.

If spot macro conditions were to persist, the upside case is this could be delivered in half the time to end-1Q27. "This drives significant improvement in the ratio of financial expenses/dividends, signalling potential for a debt-to-equity value transfer which sees BP return to distribution growth," JPM said.

"With the dividend already yielding close to 5% and growing 4% CAGR we assume this is calibrated through buybacks and a 1/3 CFFO payout, giving a 2028 cash yield of 7.4% (versus 2026e 4.8%)."

As far simplification is concerned, JPM said a tightened remit around value and strategic fit has emergent potential to lead disposal led right-sizing above-and-beyond a prevailing $20bn target.

"Put together, we conclude effective execution on BP's restructuring agenda has potential to deliver value equivalent to a high single digit percentage underlying EPS CAGR 2025-28," it said. "This would keep the company competitive with what we regard as a conceptual supermajor growth framework through its transition phase while it matures 2030+ volumetric growth potential."

At 0940 BST, the shares were up 0.7% at 546.10p.