BP‘s (LSE:BP) been in the news a lot over the past few days. In response to the changes going on at the business, Wall Street brokers and analysts have been busy revising their forecasts where they see the BP share price moving over the next year.
When I consider that the current price is 456p, some of the revisions make for very interesting reading!
A busy week, so far
Before we get to the numbers, let’s briefly recap what’s been going on. Activist hedge fund Elliott Investment Management revealed a significant stake in the oil stock on Monday (10 February), causing this share price to jump 7%.
On Tuesday, BP released annual results for 2024. This included a sharp drop in profits to $8.9bn, from $14bn the previous year. As part of the release, CEO Murray Auchincloss announced plans to “fundamentally reset” BP’s strategy.
Changing strategy and restructuring the business is something Elliott will be pushing for. Based on historical investments made, it has a history of trying to shake up large companies to become more efficient and profitable.
Changing forecasts
Based on the above, analysts have been rushing to update their forecasts. Several large players have now raised their target price. Citibank has a target price of 515p. Goldman Sachs is at 530p, with Barclays the most optimistic at 650p.
On the other hand, JP Morgan is Neutral at 440p, with Morgan Stanley at 407p.
All of these projections centre on where the share price could be in a year’s time. They’re just subjective views and shouldn’t be taken as gospel. However, given that these are the views of the experts, investors can certainly pull some valuable information.
Share price boosters… or not
The key thing that struck me how differing views on recent events could impact the stock. Some of analysts clearly think the reshuffle and strategy change is overdue and is a welcome sign. Reading into some reasonings, there’s the suggestion that Elliott’s involvement could lead to board changes, portfolio rationalisation, and a focus on upstream projects to maximise free cash flow.
This should filter down to higher profits which, in turn, should boost the share price.
Yet there’s also the view that the stock could fall from the current price. Over the past year, it’s down a modest 3%. A further fall could be the result of any disagreements between BP and Elliott management teams. The stock could also be negatively impacted by further criticism from environmental groups with the company shifting towards more fossil fuel projects.
Getting a complete picture
If 650p does turn out to be correct, it would reflect a 42.5% jump from the current level. Certainly, some investors might want to consider this for their portfolio. But it’s important for each investor to do their own research rather than just relying on others.
