JPMorgan has downgraded BP (NYSE:BP) from Neutral to Underweight, following an analysis of the company's Q3 results. The downgrade was prompted by the increasing reliance of BP's cashflows on trading and working capital, which are exhibiting larger standard deviations.
Alongside this downgrade, JPMorgan also reduced BP's price target to 550 pence ($40.02 per U.S listed share) from its previous 615 pence. This decision reflects the analysts' concerns regarding BP's financial stability.
In contrast, the analysts at JPMorgan showed a preference for Shell (LON:SHEL) and TotalEnergies (EPA:TTEF). They anticipate these companies will make more significant shifts towards renewable energy sources in the near future. Moreover, they predict a potential reduction in Q4 buybacks to $1 billion.
InvestingPro Insights
Adding to the discourse, InvestingPro offers some valuable insights into BP's current standing in the market. The InvestingPro data reveals that as of Q3 2023, BP's market cap stands adjusted at $101.63 billion with a P/E ratio of 4.15, indicating a potentially undervalued stock. The revenue for the last twelve months is recorded at $226.03 billion, and despite a slight dip in the quarterly revenue growth (-2.87%), the company has maintained a gross profit margin of 34.35%.
Two key InvestingPro Tips that complement this data are: firstly, BP's management has been actively buying back shares, a strategy often used to boost shareholder value. Secondly, BP has been consistent in maintaining dividend payments for 32 consecutive years, a testament to the company's commitment to its shareholders.
These insights, coupled with the additional 6 InvestingPro Tips available for BP, provide a comprehensive understanding of the company's financial health and market position. For more in-depth tips and data, consider exploring InvestingPro's platform.
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