- BP
- 19 May 2025 10:26:33
Source: Sharecast
"As we lower our oil price outlook for 25/'26, we see BP's strategy facing increasing execution risk: the company may soon have to face the hard choice between delivering on the leverage reduction target or suspending the buyback and/or, reducing its upstream growth ambitions," the bank said.
Jefferies said its large-cap order of preference is Shell, then TotalEnergies, then BP.
The bank pointed out that BP has the highest leverage in the sector. In February, BP presented a "credible" plan to reduce net debt by $5-9bn and hybrid debts by around $4bn by 2027, Jefferies said.
"However, in the current macro conditions, we see this plan as increasingly at risk: at $65/bbl oil prices, bp will generate circa $8bn lower CFFO compared to its '25-27 plan.
"This leaves de-gearing almost entirely driven by the execution of the $20bn divestment plan, which we see as facing greater risks due to global economic uncertainty."
It noted that year to date, BP has underperformed its European peers by around 5%.
"However, NTM (next twelve months) earnings estimates have fallen by 9pcp more than for the sector (12%), resulting in a relative price-to-earnings re-rating: currently at 14x versus the sector at 11x (FY25)."