BP PLC (LSE:BP.) is due for a slow re-rating from this point onwards, suggests UBS, as self-help measures and a steady retreat from its green initiatives feed through into higher earnings.
Debt concerns are also overdone says the Swiss bank, with risks now to the upside in its view.
Starting the process will be a 10% dividend increase in the second quarter, a reset of the strategy in favour of returns and a better performance coming from BP's growth engines, all of which will lead to an upward revision of 2025 estimates.
UBS points to scaling back investments in offshore wind &advanced biofuels, refocusing the EV charging strategy, introducing a new cost savings target and lining up future oil and gas investments in the US as evidence that the focus is now on returns.
Buybacks will also slow with an emphasis on steady dividend growth and as the recent initiatives start to come through the break-even oil price should fall, debt reduce and the shares get a re-rating.
Buy is UBS’s stance with a 600p a share price target.