Olje

mekker
15.05.2019 kl 12:35 3719

We upgrade after share price drop
We see the drop in the Aker BP share price as excessive and upgrade our
recommendation to Buy. The start-up of the Johan Sverdrup field in
November, further growth in production as well as solid and growing
dividends will support the stock.
Excessive share price drop
The Aker BP share lost 17% during the last three weeks, while Brent oil price
slipped only ca. 5% and remains slightly above USD 70/b. The oil price is
supported by the renewed U.S. sanctions on Iran and their impact on its oil
supplies, increased geopolitical risks in the Persian Gulf region, as well as
continuing OPEC production cuts. We keep our long-term Brent price estimate
of USD 70/b intact.
Upgrade to Buy
Our updated NAV estimate is NOK 249/sh., a reduction of NOK 11/sh. vs. our
previous report due to increased net debt and a dry well which reduces
exploration potential in 2019. Meanwhile, Aker BP’s 1Q19 report was nonevent as key figures had been pre-announced and guidance for 2019 was
reiterated. Our rounded target price is reduced to NOK 310/sh. (from
NOK 330) based on the same 25% premium over NAV, explained by Aker BP’s
history of value-accretive M&A deals. This target price is in line with our
calculated value derived from the discounted dividend model, based on the
guided dividend level in 2019-2023, 2.5% long-term growth and 10% cost of
equity. We see the drop in the share price as excessive and upgrade our
recommendation to Buy (from Hold).

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