BP PLC (LON:BP.) was a notable FTSE 100 riser today after UBS upgraded its rating for the oil major to ‘buy’ from ‘neutral’ with an increased price target of 550p, up from 500p.
In its 2017 Outlook, published today, the Swiss bank’s oil analysts said that BP seems to have found a "new sense of purpose" in its upstream business.
The analysts said they are also optimistic on the improvements being made to the oil giant’s financial position.
They added that BP's 2016 field trip to Azerbaijan ”helped emphasise a new sense of direction and helped dispel concerns that it needs to make material acquisitions.”
Overall, the analysts said they believe the European Integrated oil sector will “increasingly reflect improved cost and capital productivity.”
They expect that European Integrateds will be re-assessed by investors in the context of their improved use of operating cashflow and it is in that context they are raising their rating for BP.
Elsewhere in the sector review, UBS also reiterated its ‘buy’ rating on BP’s Anglo-Dutch peer Royal Dutch Shell Group (LON:RDSA) and raised its price target for the stock to 2.500p from 2,250p.
Referring to Shell, the bank’s analysts said: “Disappointing 2Q results were a reminder of an enduring frailty of the company – volatile results, but 3Q course corrected, demonstrating the underlying cashflow generation capability.”