BP (BP) PT Raised to $38 at Evercore ISI

Evercore ISI analyst Stephen Richardson raised the price target on BP (NYSE: BP) to $38.00 (from $35.00) while maintaining a Outperform rating.

The analyst comments "BP reports stronger 2Q driven by downstream, trading, and some sequential volume help. With the market intently focused on shareholder distributions for Big Oils and the sustainability of these yields depending on the environment, steady progress on operational performance and cost control goes a long way. At BP specifically the environment helped matters in 2Q (despite lower benchmark oil and gas quotes) as refining and oil volatility both helped results (not to suggest trading is on autopilot). Further, cost reductions are providing some confidence in the sustainability of shareholder returns even as the external environment proves challenging. It’s early in the turnaround program but 2Q provided another good update across major initiatives. The more confidence builds in the consistency of cost reduction efforts and the impact to the bottom line, the better, for this stock. De-leveraging is likely the ultimate prize here (to reduce commodity volatility) and that looks to be dependent on some progress on major divestitures that are ongoing (Castrol the nearer-term target to watch). Coming off a fallow period for resource capture (both organic and inorganic) the upstream is clearly on the front foot executing major project starts (5/10 envisioned by 2027), showing progress with the exploration drill-bit, and expanding contracts / entries with various NOCs. Resource capture can take a long and winding road to booking proved reserves, but high grading looks to be needed in the context of the defined capex in the capital frame. While investor feedback on the ‘new’ strategy may have been lukewarm in February, there is some momentum here and if cost reductions and operations continue to show momentum, it’s key for a name where valuation continues to reflect lingering skepticism."

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