Shares in troubled oil giant BP (LON:BP.) rose by a further 4% in early morning trading to 374.4p - 14.7p since the market open. Since closing at a low of 337p on Wednesday, the shares have climbed off the bottom, rising 6.7% yesterday to 359.7p and then a further 14.7p today. Investors have been encouraged by a rash of broker notes tipping the oil giant as a buy at this price level, saying that much of the political uncertainty has been removed with the decision to cut dividends for the rest of the year and the agreement with the US President to set up a $20bn compensation fund.
Collins Stewart said yesterday that the the balance of risk and reward has shifted enough to upgrade the stock to Buy and it has a target price of 450p. The Broker adds the fact that BP's payments into the claims fund are being phased will make them reasonably manageable, putting less stress on the balance sheet.
Panmure Gordon says that although the amount BP is putting into escrow is at the top end of expectations and shareholders will sacrifice the dividend over the next three quarters, it should ultimately be good news for the Company. The Analyst says:".. it will ensure the survival of BP and , having appeased the US, we believe that once the well is killed off, the shares should rally and we maintain our price target of 600p. However, until the uncertainty is removed we believe that the shares will struggle to perform in the short term."
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