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 100% 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.
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.
Source: FT, October 2021
According to the analysts polled by the Financial Times (as shown above) there are currently 6 with a buy rating, 8 outperform, 9 holds, 3 underperform and 0 sell. The majority of the group is in the hold category but with more leaning towards the buy and outperform recommendations rather than underperform and sell.
While the overall sentiment is leaning more towards the bullish side but with a majority now remaining on hold, it’s worthwhile having a look at some of the price targets that these analysts put on the stock.
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 23 analysts providing 12-month price targets polled by the Financial Times, the median target price for BP shares is GBX 379.26, with the highest estimated price target at GBX 538.79 and the lowest estimated price target at GBX 289.34.
Source: Admirals MetaTrader 5, BP, Monthly - Data range: from 1 Jan 1990 to 29 Oct 2021, performed on 29 Oct 2021 at 8:30 am GMT. Please note: Past performance is not a reliable indicator of future results.
In the long-term, monthly price chart of BP’s share price above, the green line represents the highest estimated price of the analysts polled above, the blue represents the median estimated price and the red line represents the lowest estimated price for the next 12 months.
At the time of writing, BP shares price is just below the median target price level. Technically, the price has also managed to break back above the GBX 318.00 price level which was significant support in the past (as seen by the two major turns higher in January 2010 and May 2015 off the black horizontal line).
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 underperform 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.
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).
2. Trade.MT5 Account. Buy and sell BP shares and more than 4,000+ other instruments using Contracts for Differences (CFDs).
- 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.
Step by Step Process on How to Buy BP Shares
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 Trader’s Room. 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.
Source: Admirals MT5 Web Trader Invest.MT5 Account
Why Buy BP Shares with Admirals?
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