Keep it simple, Barclays tells investors in BP
(ShareCast News) - 'Keep it simple', analysts at Barclays advised investors in BP shares, highlighting how if the dividend was sustainable then the yield on offer was 7.0% and pointing to a number of projects which were expected to start up in the backhalf of 2017.
In their view, 2016 was one of implementing change and preparing the company for a period of sustained growth.
Last year, BP reduced upstream costs by 17% and cut its headcount back down to 2005/06 levels, the broker said.
It also replaced its reserves for the first time since 2013.
The ADCO concession helped BP in that but it nonetheless does support the company's target of 5% production growth out to 2021.
Barclays reiterated its 'Overweight' stance and 625.0p target price for the shares.
"In many ways, it would be easy to overcomplicate the investment case for BP, but for us, the attraction is in the simplicity. If the dividend is sustainable, then the shares, which offer a 7% yield, remain meaningfully undervalued, and we expect to see a differentiated performance, particularly from 2H 2017 as a number of the larger projects start up."