BP PLC's (LSE:BP.) earnings miss has wiped £5.5 billion from the FTSE 100 company's valuation in little over a day, and has also given one of the world's most influential investment banks pause for thought.
On Wednesday, JPMorgan weighed in with a downgrade, sending ripples through the market and exacerbating the oil giant's capital markets woes.
It moved to 'underweight' from 'neutral' while dropping its price target to 550p from 615p.
In a note, JPMorgan revised its financial outlook for BP, cutting its projected net income for the fiscal year 2023 by 10% to $14.6 billion.
The investment bank also reduced its 2024 net income forecast by 6%, citing subdued performance in oil and gas production and average gains in gas trading.
These new projections place BP's expected earnings for 2023 and 2024 at 9% and 3% below market consensus, respectively.
Factoring in these lowered expectations and increased financial volatility, JPMorgan applied a 10% discount to BP's stock's fair value.
Consequently, the bank reduced its target price for BP shares by 11% to 550p.
This new valuation suggests that BP's stock has less growth potential compared to the average of European oil companies and even indicates a possible 5% decline in a worst-case scenario.
In late morning trade, BP stock was down 1.5% to 495p.