The British oil and gas company BP (NYSE:BP)(GB:BP) is set to release its fourth-quarter financial results on Tuesday, February 7. The favorable market backdrop, including strong demand, tight supply, and higher average realization compared to the prior year, will likely support its earnings. BP’s could well beat earnings again, but concerns remain.
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BP has surpassed Street’s projection on the profitability front in the last seven quarters. As for the fourth quarter, analysts expect BP to post earnings of $1.66 per share, compared to the $1.23 reported in the prior year’s quarter.
BP expects to benefit from the low inventory levels, supply cuts by OPEC+ nations, and uncertainty around Russian exports. However, compared to the third quarter of 2022, earnings are likely to decline, reflecting lower realized prices for crude and gas.
Is BP Stock a Buy?
It’s worth highlighting that higher average realized prices of oil and gas helped BP reduce its debt and boost shareholders’ returns through buybacks. Moreover, the favorable market backdrop supported the uptrend in BP stock.
However, BP has underperformed its American peers. Shares of Occidental Petroleum (NYSE:OXY), Exxon Mobil (NYSE:XOM), and Chevron (NYSE:CVX) have gained about 50%, 37%, and 25%, respectively, in one year. During the same period, BP stock appreciated only 7%.
Its increased investments in energy transition opportunities slowed its growth. Meanwhile, the EU (European Union) windfall profit tax further remained a drag.
On TipRanks, BP stock has a Moderate Buy consensus rating, reflecting two Buy and three Hold recommendations. Meanwhile, analysts’ average price target of $41.75 implies 18.78% upside potential.
