BP (NYSE:BP) a lot of positive input from Bank of America (NYSE:BAC) analyst Alejandro Demichelis, who upgraded the stock to a "Buy."
Demichelis says he sees upside for the oil giant of 31 percent, saying the stock is undervalued from a net asset value basis.
“Importantly, BP appears to be making progress accessing new deepwater opportunities globally (Brazil, Angola, Australia) that can ultimately inject growth in the portfolio outside of the Gulf of Mexico medium term,” Demichelis wrote in a note.
He noted the BP trades at a 50 percent discount to its net asset value, versus an average of 23 percent among its peers.
As to the risk associated with the Macondo oil spill in the Gulf of Mexico, he said “much of this liability has been already priced into the stock (assuming no gross negligence).”
Concerning the debacle in Russia with Rosneft, he had this to say:
“Whilst talks with ROSN/AAR are ongoing, despite the lapsed deadline, we think that it is likely that the deal may not happen, as we struggle to see room for an improved offer. We nonetheless see a resolution of this situation either way as a positive. In our view, if BP does manage to revive the deal this achieves the strategic aim of entering the Arctic, reducing uncertainties. If BP walks away from it, this calls the strategy into question, putting pressure on management to explore more drastic strategic avenues to crystallise value.”
BP closed Thursday at $43.89, gaining $0.62, or 1.43 percent.
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