BP PLC (LSE:BP.) is still in a strong position despite recording an 80% drop in second-quarter profit on Tuesday, analysts have reassured.
Though quarterly profits of US$1.8bn indeed failed to live up to expectations, Citi Group tipped BP was still on a strong footing.
“We see good signals around growth and earnings momentum over the coming quarters that we think can drive bp equity outperformance,” Citi said.
According to the bank, BP could well deliver compound annual cash flow growth of between 3% and 4% from 2022’s US$40.9bn – “a decent rate in the context of the energy industry”.
This could be driven by the company’s transition to alternative fuels, though liquified natural gas will also likely remain key, it added.
BP’s quarterly profits were massively hit by a scaling back in wholesale fuel prices, with the oil giant having enjoyed a record performance in 2022 on the back of the Ukraine war.
Despite this, Citi remained behind BP, referencing the stock’s near-10% discount to those in rival Shell PLC (LSE:SHEL, NYSE:SHEL).