London-Based oil giant, BP plc (ADR) (NYSE:BP), remains bullish over its prospects going forward, despite the ongoing standoff in Russia that has waged a wave of concerns, considering the company has huge interests in the Russian energy sector. RBC Capital Markets’ Peter Hutton has an ‘Outperform’ rating on the company after the company continued to show consistent growth on its year-over-year growth prospects especially in the U.S. liquid division.
“We have BP plc (ADR) (NYSE:BP) as an ‘Outperform’ with a price target of $530. One of the things we highlighted last quarter was quite a milestone for BP in that, that was the first quarter where they showed year-on-year growth in U.S. liquids, and those are some of the most profitable parts of BP’s business,” said Mr. Hutton in an interview on CNBC.
Last quarter alone, BP plc (ADR) (NYSE:BP) has built on U.S liquids strength with the segment growing by 28% on a year-over-year basis. BP has already announced a 65% increase in profit that came in at $3.4 billion as the company continues to recover from the Gulf of Mexico oil spill of 2010. Cost cutting measures are also starting to have a major impact on earnings as the company continues to simplify its operation.
BP plc (ADR) (NYSE:BP) is one of the few stocks in the market according to Mr. Hutton that is offering fair value with a greater option of consolidation of the entire business, as well as simplification of its operations. Mergers have been mooted as one of the plays that major oil companies may opt to engage in, going forward. Hutton, on his part, believes that BP will mostly opt for asset-mergers rather than full-blown mergers.
“[…] We think some of the stocks are at around their fair levels. BP plc (ADR) (NYSE:BP) is one of the few which is offering some value. I think there is more like an opportunity for consolidation; there is an opportunity for simplification of the business and turn to drive costs down. I think the oil companies themselves will be looking to do that through potential sort of asset mergers rather than full-blown corporate mergers,” said Mr. Hutton.