Broker tips: BP, Volution Group

Analysts at Berenberg sounded a positive note on the long-term prospects for BP as it transitions towards renewable energies.

However, for the company to attain its stated goals for 2030, as per management's strategic update from 14-16 September, it had a lot of hard rowing ahead of it, including "huge" investments and even after those, the analysts said it would take time for investors to buy in.

"The company aims to have 20% of capital employed in transition businesses by 2025; we view this as a reasonable minimum level to achieve before market valuations start to give BP credit for the higher multiple potential of these businesses," they said.

In any case, for over the near-term, that is to say for the next 12 months, the key drivers of the stock would be: progress on asset sales, on reducing net debt, its success in cutting costs, a possible restart of share buybacks and "any recovery in oil prices".

Thus, while Berenberg bumped up its estimates for the outfit's adjusted earnings per share across 2020-22, it lowered its target price from 320.0p to 260.0p, while keeping its recommendation for the stock at 'hold'.

Analyst at Canaccord Genuity maintained their 'hold' rating on ventilation products supplier Volution Group on Thursday following the firm's in-line results.

Canaccord said there was "no big surprises" in Volution's full-year results, but noted that they did show "a very good level of cash generation", with net debt better than expected.

"Revenue and earnings were broadly as expected and benefited from the group's geographical diversification with better profit outcomes in Europe and Australasia mitigating the negative impact of the sharp UK profit fall," said the analysts.

The Canadian bank also highlighted that operating profit was "slightly higher" than it had expected but stated a higher tax rate meant that adjusted earnings per share were just broadly in line with expectations.

"With trading hopefully adjusting to a less disruptive backdrop, and assuming current trends continue, it seems that the group plans to reinstate dividends this year and more seriously consider further acquisitions," said Canaccord, which also reiterated its 190.0p target price on the stock.