Yahoo Finanza Why BP Stock Is Testing Yearly Highs Today
BP Stock Rallies As Oil Gets To New Highs
Shares of BP gained strong upside momentum and moved to yearly highs as Brent oil moved towards the $83 level while WTI oil managed to get above $79.
BP stock was under pressure in summer amid concerns about the negative impact of the Delta variant of coronavirus but started to move higher in the second half of September.
OPEC+ has recently decided to stick to the original plan and increase oil production by 400,000 barrels per day (bpd) in November, which was bullish for oil and pushed it to yearly highs.
Not surprisingly, traders rushed to buy oil-related stocks, so BP managed to get above June highs and continues its upside move.
What’s Next For BP Stock?
Energy giants like BP have been mostly unloved by analysts in recent months as the analyst community focused on energy transition away from fossil fuels.
However, recent events indicate that energy transition should be gradual as attempts to speed up the process have already led to high energy prices.
Analysts expect that BP will report earnings of $3.24 per share in the current year and $3.49 per share in the next year, so the stock is trading at just 8 forward P/E which is very cheap for the current market environment. It should be noted that analyst estimates have been moving higher in recent weeks, which is bullish for BP stock.
The company’s low valuation highlights market’s concerns about the future of fossil fuels, as well as the pressure from some funds who have decided to get out of such investments.
However, analyst estimates will likely continue to move higher as analysts will have to put higher oil prices into their models, so BP shares may gain more upside momentum. In addition, there is potential for multiple expansion as investors may decide to increase their exposure to energy due to the recent developments in oil, gas and coal markets.
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This article was originally posted on FX Empire
