UBS has upgraded BP PLC (LSE:BP.) from 'neutral' to 'buy' and lifted its price target from 650p to 700p, arguing that new chief executive Meg O'Neill has a clear opportunity to reverse years of disappointing returns since taking the reins in April.
The upgrade comes as BP's shares trade at 565p, meaning UBS sees around 24% upside to its target price, with the elevated oil price environment driven by the ongoing conflict in the Middle East providing an additional tailwind.
BP's shares have lagged behind rivals including ExxonMobil, Shell and TotalEnergies by more than 50% since 2018, a period marked by costly and largely unsuccessful investments in renewable energy, a bloated cost base and a heavily indebted balance sheet.
UBS argues all three of those problems are now improving. The bank believes BP can cut its operating costs by $3 to $6 billion, potentially boosting pre-tax earnings by up to 26%, by bringing its cost base more in line with peers such as Shell, which achieved similar savings after its own management overhaul in 2023.
BP also carries the highest debt load in its sector at a leverage ratio of 47%, but UBS expects this to fall sharply to around 27% by 2028 as higher oil prices generate cash and asset sales proceed, with the $10 billion sale of a majority stake in lubricants brand Castrol already agreed.
On growth, UBS highlighted 14 new oil and gas discoveries since the start of 2025, including the potentially huge Bumerangue find in Brazil, which it said has refilled BP's project pipeline with higher-quality opportunities than the company has seen in years.
O'Neill is expected to present a full strategic update in the second half of 2026.