For more than a month, the “big five” oil majors have been free of analyst sell ratings. No longer.
BP (LON:BP) was downgraded to underweight from neutral at JPMorgan Chase & Co. on Wednesday, distinguishing it from peers Chevron, Exxon Mobil, Shell and TotalEnergies, none of whom have a sell or equivalent recommendation.
The negative rating — the first since TotalEnergies was upgraded by Mediobanca in September — comes a day after what JPMorgan analyst Christyan Malek described as a “substantial” third-quarter profit miss.
He also flagged an “unattractive” valuation as well as waning buyback momentum.
The shares fell as much as 2.8% to a two-month low on Wednesday, extending Tuesday’s 4.6% drop after results showed weakness in gas trading.
For BP, it’s the first sell or equivalent recommendation since April. The stock still has 17 buy ratings and eight holds, according to data compiled by Bloomberg.
While the shares are still in positive territory for the year, in line with the Stoxx 600 Energy Index’s 3.4% gain, they have declined 11% over the past two weeks amid a falling crude price and as European oil majors risk trailing US competitors amid a rush of dealmaking.
BP is also reeling from the loss of a number of high-profile executives, including September’s shock departure of Chief Executive Officer Bernard Looney, raising questions over the company’s strategy going forward.
For JPMorgan’s Malek, it’s the first time he’s had a negative rating on the stock in data going back to 2016. He has a “clear preference” for Shell and TotalEnergies among the European majors, rating both overweight, he wrote in the note.