April 25, 2007
Analysts wait for good news from BP
Having chewed over Tuesday’s first quarter results from BP, featuring a 17 per cent drop in profits, Deutsche Bank’s analyst Lucas Herrmann has downgraded his recommendation from a hold to a buy, suggesting a price target for the shares of 580p, against a close on Tuesday of 568.5p.
Looking further ahead, however, he argues:
"Fortunately, where the company’s refining activities continue to attract more attention than they ought, in E&P the recently espoused ‘end of year’ timelines around the key growth projects continue to appear conservative."
Those projects include Atlantis in the Gulf of Mexico and Greater Plutonio and Rosa in Angola.
When the full-year results came out in February, and BP set out some very conservative guidance on future production, we suggested that the company might be trying to give the best possible platform for Tony Hayward to report some good news (requires subscription) after he takes over in August. It has not been doing much to accentuate the positive since then, promising a "year of consolidation" in 2007.
Another analyst, Peter Hitchens of Teather & Greenwood, suggests in a note today that that means there could be better news to come as we head into 2008:
"We believe that BP will perform in line with its peers for the next six months as the company is in a transition period. John Browne will step down as chief executive in July and will be replaced by Tony Hayward. Once Hayward takes full control, we believe the new strategy will start to emerge and could lead to some outperformance."
