Home Stock BP share price forecast: on track to hit 400p soon

BP share price forecast: on track to hit 400p soon


The BP (LON: BP) share price slipped by more than 2.5% on Tuesday even after the company published strong quarterly results. The stock declined to 345p, which was about 5% below its year-to-date high. 

BP earnings preview

BP is a major oil and gas company headquartered in London. Like its other global peers like Royal Dutch Shell, Chevron, and ExxonMobil, the company has performed relatively well. This performance has been helped by the strong demand for oil and gas in the markets it operates. 

It has also been boosted by the relatively high oil prices. Indeed, the price of crude oil has jumped to a seven-year high while that of natural gas has rallied to a record high. This performance is mostly because of the decision by OPEC+ to boost oil production at a slower pace than expected. 

Analysts expect that oil prices will keep rising as more power generators in Asia shift from coal to oil. This is because coal prices as well has been in a major bullish trend.

The impacts of the higher oil and gas prices became clearer on Tuesday when BP published its quarterly results. Unlike Royal Dutch Shell, which missed estimates, BP reported stronger-than-expected results. Its underlying replacement cost profit rose to $3.3 billion in the previous quarter. 

BP also reported an operating cash flow of about $6 billion while its net debt declined to $32 billion. Its reported loss for the quarter was about $2.5 billion because of fair value accounting effects. 

In its bid to woo investors, BP announced that it will buy back its stock worth about $1.25 billion. This program is in addition to a previous $1.4 billion buyback program that it completed on November 1.

So, is BP share price a good investment? Most analysts are generally upbeat about the stock’s performance. These include analysts from TD Securities, Raymond James, Berenberg Bank, Morgan Stanley, and Barclays. At the same time, a DCF valuation by Simply Wall St shows that the stock is undervalued by about 11.15%.

BP share price forecast

The daily chart shows that the BP share price has been in a strong bullish trend in the past few months. The stock made a bullish breakout when it rose above the key resistance level at 332p. This was the highest it has been since June. It has also moved above the 25-day and 50-day moving average. 

Therefore, despite the pullback on Monday, the stock will maintain a bullish trend as bulls target the key resistance level at 400p.

The post BP share price forecast: on track to hit 400p soon appeared first on Invezz.

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