The United Kingdom-based BP Plc (LON: BP) has staged a remarkable recovery from the depths of the COVID-19 pandemic. Once hitting rock bottom in 2020 with shares plummeting to £190 and annual revenue dropping by over 62%, BP has since rebounded impressively. Fast forward to today, the company boasts a market cap of £93 billion and has seen its revenue grow by more than 70% in 2022 alone. This resurgence has not only revitalized investor confidence but also set the stage for a bullish trend in BP’s share price. Dive into the financial and technical analysis to understand why this oil and gas giant is once again capturing the market's attention.
The Heroic Comeback of BP Plc
BP Plc, an integrated oil and gas company, operates through segments like Upstream, Downstream, and Rosneft. Founded in 1909, BP has a storied history and is now considered a large-cap firm. The COVID-19 pandemic hit BP hard, with shares hitting a low of £190 and annual revenue plummeting by more than 62%. However, the company has made an impressive recovery, both fundamentally and technically.
Financial Recovery
From a fundamental standpoint, BP has experienced significant revenue growth since 2020. In 2021, the company reported a revenue growth of 38.8%, followed by an even more impressive growth rate of over 70% in 2022. Despite this growth, the company remains net profit negative, with the revenue growth only transferring to pretax income.
This financial recovery has instilled confidence in bullish investors. As quarterly reports for 2021 started coming in, BP’s share price began to rise. In September 2021, the bulls managed to claim the support level of £292, starting a bullish trend in BP’s share price. By November 2022, the bulls had broken a significant resistance level of £503, ultimately bringing the bullish rally to an impressive peak of £565 in February of this year.
Technical Analysis and Prediction of the BP Share Price
After facing some corrections from the high of £565, the BP share price is back on an uptrend once again. At the press time, the BP share price is trading at the level of £557. The bulls have taken support from the level of £496 and broken the resistance of £537. BP share price is moving towards the resistance level of £566.
The Relative Strength Index (RSI) is already at its overbought level of 68, a result of the recent surge after the bulls reclaimed the support. The bulls are currently facing selling pressure, as the RSI suggests. The price prediction for the BP share price will be bearish in the short term. The RSI will cool down before the bulls can make another attempt to break the resistance of £592.
Conclusion
BP Plc (LON: BP) is an integrated oil and gas company that has made a remarkable comeback from the COVID-19 period with an uptrend. The current share price has broken a major resistance, and it is predicted that it will give some correction in recent times.
Technical Levels
- Support: £537 and £496
- Resistance: £566 and £592
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks comes with a risk of financial loss.
BP's Strategic Moves and Future Prospects
BP's recovery is not just a result of market dynamics but also strategic moves that have positioned the company for future growth. The company has been focusing on transitioning to renewable energy sources, aligning with global trends towards sustainability. This strategic pivot is expected to play a crucial role in BP's long-term growth and stability.
Renewable Energy Initiatives
BP has been investing heavily in renewable energy projects, including wind and solar power. The company aims to become a net-zero company by 2050, a goal that has resonated well with environmentally conscious investors. This shift towards green energy is not only a strategic move but also a necessity as the world moves towards reducing carbon emissions.
Digital Transformation
BP is also leveraging digital technologies to optimize its operations. The company has been using data analytics, artificial intelligence, and blockchain technology to improve efficiency and reduce costs. These technological advancements are expected to provide BP with a competitive edge in the oil and gas industry.
Financial Health and Dividend Policy
BP's financial health has been improving, thanks to its robust revenue growth. The company has also been focusing on reducing its debt levels, which has further strengthened its financial position. BP's dividend policy has been a key attraction for investors. The company has been consistently paying dividends, and with its improving financial health, it is expected to continue rewarding its shareholders.
Market Sentiment and Analyst Opinions
Market sentiment towards BP has been positive, with many analysts recommending a 'buy' rating for the stock. The company's strong financial performance, strategic initiatives, and focus on renewable energy have been the key drivers of this positive sentiment. Analysts believe that BP has the potential to deliver strong returns to its investors in the coming years.
Risks and Challenges
While BP's recovery has been impressive, there are risks and challenges that the company faces. The volatility in oil prices, regulatory changes, and geopolitical tensions are some of the factors that could impact BP's performance. However, the company's strategic initiatives and strong financial position are expected to help it navigate these challenges effectively.
Conclusion
BP Plc (LON: BP) has made a remarkable recovery from the COVID-19 pandemic, thanks to its strong financial performance and strategic initiatives. The company's focus on renewable energy and digital transformation is expected to drive its long-term growth. While there are risks and challenges, BP's strong financial position and positive market sentiment make it an attractive investment option.
Technical Levels
- Support: £537 and £496
- Resistance: £566 and £592
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks comes with a risk of financial loss.
BP's Commitment to Sustainability
BP's commitment to sustainability is a key factor that sets it apart from its competitors. The company has been focusing on reducing its carbon footprint and investing in renewable energy projects. This commitment to sustainability is not only beneficial for the environment but also for the company's long-term growth.
Carbon Reduction Initiatives
BP has set ambitious targets to reduce its carbon emissions. The company aims to reduce its operational emissions by 30-35% by 2030 and become a net-zero company by 2050. BP has been investing in carbon capture and storage technologies, which are expected to play a crucial role in achieving these targets.
Renewable Energy Projects
BP has been investing in a range of renewable energy projects, including wind, solar, and bioenergy. The company has been expanding its renewable energy portfolio and aims to generate 50 gigawatts of renewable energy by 2030. These projects are expected to provide BP with a stable and sustainable source of revenue in the long term.
Partnerships
