JPMorgan upgrades BP stock rating on balance sheet repair outlook By Investing.com

Investing.com – JPMorgan upgraded BP Plc. () () from Neutral to Overweight on Wednesday and raised its price target to GBP6.75 from GBP5.50. The upgrade comes as BP trades at $43.10, down 5% over the past week but up an impressive 29% year-to-date. According to InvestingPro analysis, the stock remains undervalued relative to its Fair Value, with data showing BP maintains a perfect Piotroski Score of 9, indicating strong financial health.

The firm said BP’s balance sheet repair represents a non-negotiable starting point for the company. JPMorgan models deleveraging inflecting from the second half of 2026, with gearing metrics falling back in line with peers by year-end 2027 at base case of no more than $75.

The analyst said BP’s restructuring agenda carries a value opportunity equivalent to a high single-digit percentage three-year underlying earnings per share compound annual growth rate. The firm noted 2030s growth optionality is positively trending on both an absolute and risk-adjusted basis.

JPMorgan projects the 2027 free cash flow yield at 11% at $75 Brent and near $20 refining. The oil sensitivity is approximately 180 basis points per $10 per barrel. Currently, BP’s free cash flow yield stands at 14%, while the company offers a dividend yield of 4.78%. InvestingPro subscribers have access to over 10 additional exclusive tips for BP, plus comprehensive Pro Research Reports covering 1,400+ top US stocks with clear, actionable intelligence.

The firm said the current conditions comprise an attractive mix of low direct Middle East exposure, competitive refining and high trading optionality.

In other recent news, BP reported stronger-than-expected earnings and revenue for the second quarter of 2026. The company posted adjusted earnings per share of $2.22, surpassing the forecast of $1.51, and revenue of $69.11 billion, exceeding the estimated $61.79 billion. Evercore ISI added BP to its Tactical Outperform List, maintaining an In Line rating with a $52.00 price target, and projected BP to generate $15 billion in free cash flow in the second half of 2026. The firm also estimated $21 billion in excess cash flow, considering various financial obligations and asset sale proceeds.

Additionally, BP has agreed to sell portions of its offshore exploration assets to Shell in Brazil and the Gulf of America. This includes a 50% stake in the Tupinambá exploration block in the Santos Basin and a 30% stake in the Conifer exploration prospect. In a related development, Woodside Energy announced the sale of its 70% interest in the Calypso Project in Trinidad and Tobago to BP, which already holds the remaining 30% stake. Meanwhile, TD Cowen discussed potential diesel export quotas, noting that such measures could lower diesel prices and margins if implemented.

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