BP Plc (BP)

[eFinanceMarkets]

$BP Oil outlook cut at Societe Generale; market not improving as fast as expected

Societe Generale is the latest to throw in the towel on a 2017 crude oil recovery, as it cuts its crude oil price targets and income outlook for the oil companies it covers.

The firm cuts its 2017 price forecast for Brent crude oil to $50/bbl from $55, as well as 2018 to $50 from $60 and 2019 to $52/bbl from $65, and sector-wide income estimates by 18.4% in 2017, 29% in 2018 and 30.6% for 2019.

In light of the new forecast and earnings outlook, Societe Generale downgrades BP (BP) to Hold from Buy, also citing higher relative valuation, lower return on average capital employed, and lower organic free cash flow yield vs. the sector; the firm cuts earnings estimates for BP, Statoil (STO +1.2%) and Eni (E +0.7%) but maintains Buy ratings for Total (TOT +1.1%) and Royal Dutch Shell (RDS.A, RDS.B).