Is BP worth 399p a share?

Over the last three months, analysts covering BP have offered an average 12-month price target of 399p per share for the oil and gas major.

But is the BP share price really capable of such a meteoric rise amid a myriad of headwinds?

Ambitious green targets for BP could hinder rally to 399p a share

Shares in BP could trend lower after the company set itself ambitious green energy targets, forcing the oil and gas major to accept lower returns as it transitions away from fossil fuels.

The company plans to become the one of the world’s largest renewable power generators, with it targeting 50 gigawatts of wind, solar and hydropower in its portfolio by 2030.

‘Energy markets are fundamentally changing, shifting towards low carbon, driven by societal expectations, technology and changes in consumer preferences.’ BP chairman Helge Lund said in a statement. ‘And in these transforming markets, bp can compete and create value, based on our skills, experience and relationships.’

‘We are confident that the decisions we have taken and the strategy we are setting out today are right for bp, for our shareholders, and for wider society,’ he added.

BP unveils earnings reveal uphill battle ahead if stock is to hit 399p

While the oil and gas company’s new strategy for net zero and a shift to low carbon is great news for the environment, it spells disaster for its share price over the near-term, with its latest quarterly earnings revealing just how costly its transformation will be.

‘These headline results have been driven by another very challenging quarter, but also by the deliberate steps we have taken as we continue to reimagine energy and reinvent BP,’ CEO Bernard Looney said in its half-year results earlier this month.

‘In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact,’ he added. ‘Beneath these, however, our performance remained resilient, with good cashflow and – most importantly – safe and reliable operations.’

Brent crude oil prices could stop BP from hitting 399p per share

Brent crude looks to finally be on the way out of a consolidation phase, with price breaking through the top end of a symmetrical triangle formation, according to Josh Mahony, senior market analyst at IG.

‘With price tentatively rising through the $45.83 level, it is likely we will see another strong move higher from here,’ he said.

‘Given that bullish breakout, it is likely we will see further upside, with a break below the $44.73 level required to negate this bullish view.’

How to trade stocks with IG

Looking to trade BP and other stocks? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

1. Create an IG trading account or log in to your existing account
2. Enter ‘BP’ in the search bar and select it
3. Choose your position size
4. Click on ‘buy’ or ‘sell’ in the deal ticket
5. Confirm the trade