Berenberg slightly lowers target price on BP following Q3 update

Berenberg said BP reported "solid" third-quarter results on Tuesday, with adjusted operating income of $1.2bn versus consensus estimates of $600.0m, driven by its upstream operations and lower corporate costs.

The German bank also highlighted that operating cash flow was strong at $4.3bn in the quarter, enabling the company to fully cover its dividend, now at a yield of roughly 8%, with some upside potential from share buybacks likely from 2022.

"The pieces are in place for a re-rating, but we will likely need to see an improving macro environment before investors are willing to pay for an earnings rebound," said Berenberg, which also reiterated its 'hold' rating on the stock.

Berenberg did note that refining remained "weak" so far in the fourth quarter, and said it now believes demand has to recover "meaningfully" before the market tightens, given ongoing excess capacity.