Kepler upgrades BP to 'buy' on continuing momentum

Kepler Cheuvreux upgraded oil giant BP to 'buy' from 'hold' and lifted the price target to 650p from 530p, citing continuing momentum.

Kepler noted strong delivery in both upstream and downstream and said BP continues to show the right mindset, with strong capex discipline and commitment to shareholders.

It noted that BP's upstream portfolio has swung back to growth with "impeccable" project delivery in 2017 - eight start-ups on schedule and under budget - and 2018 set to be a key year for delivery, with six projects on the cards.

The broker also pointed out that through 2015-17, Macondo cost estimates kept increasing but said it now reckons this trend is over.

Kepler, which lifted its cash flow estimates by around 10% over 2018-20 on the back of higher oil and natural gas prices, expects BP to deliver $28.7bn in cash flows in 2010 and $13.2bn of free cash flow after tax.

Its sum-of-the-parts valuation now stands at 653p from 527p and there is 15% upside to its new target price.

At 1035 BST, the shares were down 0.0% to 577p.