BP Shares Buy or Sell? - Share Price Forecast
During the pandemic, shares in British Petroleum (BP) collapsed to 26-year lows. With a global lockdown, there was a huge oversupply of oil.
However, now that economies are reopening around the world, the once battered energy market is leading the race higher. BP shares are already up nearly 200% since the pandemic low.
In this ‘BP Shares Buy or Sell’ article, we go through the latest research regarding BP shares, what the analysts are forecasting and how to invest in BP shares with low commissions.
Table of Contents
BP Shares Outlook & History
BP shares took a major hit during the pandemic period leaving investors with questions why are BP shares so low? As the company still makes its money primarily from the sale of oil, the supply and demand of the commodity has a huge impact on the company’s share price.
During the Covid-19 pandemic, the world used much less oil than before as construction work and transportation came to a grinding halt. This caused oil prices to fall to 30-year lows sending energy company share prices lower.
However, now that economies are reopening demand has picked up again. Not only are oil prices higher but energy company share prices have also moved higher. The more the economy picks up, the more likely energy company share prices could also push higher.
Another – and arguably – more important trend developing is the fact many companies are planning to drill less oil due to environmental concerns, trying to transition into renewable energy sources and move into socially responsible investing. This could actually help lift oil prices as there will be less supply from around the world.
But with talks of a windfall tax from the UK government, will BP shares recover to all-time highs? It’s too early to tell yet but let’s have a look at some of the analyst ratings on the stock and how they see the BP shares outlook.
BP Shares Buy or Sell or Hold?
Analysts and researchers from the world’s largest investment banks often provide their outlook on publicly traded stocks. When analysts give recommendations, they choose from: buy, overweight, hold, underweight and sell.
Before asking yourself the question: ‘Is BP a buy, sell or hold?’ it’s worthwhile looking at what the analysts are saying. Of course, analysts can also get it wrong too but seeing what the rest of the market thinks can help to identify the overall sentiment behind a stock.
According to the analysts polled by TipRanks, there are currently 10 buys, 3 holds and 0 sell ratings on the share. The majority of the group is in the buy category but this could change over time.
BP Shares Outlook Forecast in 12 Months
When analysts give their forecasts for a certain stock it is also usually accompanied by a price target of where they think the stock should be trading in the next 12 months. While this is not a predictive tool – nothing is – it can help to understand more about how high or low analysts believe the company’s stock price should be.
Of the 13 analysts providing 12-month price targets polled by TipRanks, the average target price for BP shares is GBX 655.85, with the highest estimated price target at GBX 1,000.79 and the lowest estimated price target at GBX 550.00.
At the time of writing, BP shares price was just below the lowest price target suggesting there could be some further upside if the overall trend and sentiment regarding the energy market is sustained.
It’s important to remember that stock prices don’t move in a straight line. With most analysts having a hold recommendation, there is a higher chance price could range trade around the median price target.
BP Shares Buy or Sell? Fundamental Factors to Watch
There are many fundamental factors that could affect the price direction of BP’s share price. While oil prices have historically been the biggest factor regarding BP’s underlying profits, this may not be the case in the future.
In 2020, BP announced plans to transition away from oil and gas and into renewable energy – a trend many energy companies are taking. By 2025, the company is expected to have sold off $25 billion worth of assets.
The question for investors is what will replace that income? For these reasons, some analysts have an hold rating on the stock.
The biggest overhaul in BP’s 112-year history is underway right now. Investors will now be looking at how successful BP’s entry into renewable energy such as wind and solar power will be.
However, since the pandemic many governments and companies have back tracked on their shift to renewable energy cementing the need for oil. The recent sell-off in oil, also led to a sell-off in BP's share price showing how they are currently correlated.
BP reported a doubling of profits last year of £23 billion and still expects a rise in long-term oil prices due to increase demand from China and uncertainty around Russia's exports.
How to Buy BP Shares
Did you know that with Admirals, you can buy and sell BP shares from three different accounts? These include:
1. Invest.MT5 Account. Invest in real stocks and ETFs (exchange traded funds) from 15 of the largest stock exchanges in the world.
- Invest in BP shares with only 0.1% commission.
- Enjoy a low minimum transaction fee of just 1 GBP – useful for small accounts!
- Invest with a broker authorised and regulated by the Financial Conduct Authority (FCA), the Cyprus Securities and Exchange Commission (CySEC) and Australian Securities and Investments Commission (ASIC).
- Speculate rather than own. With CFDs, you merely speculate on the asset, rather than own the asset. This allows you to trade long and short and potentially profit from rising and falling markets.
- Trade on margin. With CFDs, you can control a larger position with a smaller deposit. For example, most retail traders may only need 20% of the total trade value to be held as margin to have the trade open. This leveraging effect amplifies profits AND losses so be careful!
3. Demo Account. You can also open an Invest.MT5 and Trade.MT5 demo account so you can trade in a virtual environment until you are ready to go live.
Buy BP Shares in 4 Steps
Below is a step by step process on how to buy BP shares using the MetaTrader 5 web platform provided by Admirals.
- Open an account and login to the Admirals Dashboard. From here, you can manage different accounts, access deposits and withdrawals and premium analytical tools.
- Click on the Trade icon next to one of the accounts you want to trade on. You will then be redirected to the MetaTrader 5 Web platform. In the Market Watch window on the left side, type in BP in the last row and stock will automatically come up.
- Drag the symbol of the stock from the Market Watch window onto the chart to view its live share price. Technical analysis traders can then adjust timeframes or add on technical indicators from the top menu.
- Open a trading ticket by right-clicking on the chart and selecting Trading -> New Order. The trading ticket will allow you to input your position size, take profit and stop loss price levels.
Why Buy BP Shares with Admirals?
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FAQs on BP Shares
Is BP a good share to buy?
Currently, some analysts have buy and hold recommendations on BP shares. The stock is sensitive to the current price of oil which has been highly volatile.
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