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Credit Suisse cuts BP to ‘neutral’ from ‘outperform’, prefers French peer Total; Shell ‘top pick’

The analysts said they calculate that Total could distribute about a 10.5% annualised yield (dividend and buyback) based on current market value, compared to BP's potential for about 8.5%
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Overall, the Credit Suisse analysts said they prefer European oil supermajors to their US peers on valuation grounds

Credit Suisse has downgraded its rating for UK energy blue chip BP PLC (LON:BP.) to ‘neutral’ from ‘outperform’ in a review of the European oil sector.

The Swiss bank also cut its target price for the FTSE 100-listed firm to 605p from 640p, with BP shares currently trading at 543.90p, down 0.5% on Tuesday’s close.   

READ: Shell’s 2018 profits jump by a third to best levels since 2014, cash generation strong

In the note to clients, Credit Suisse’s analysts said they have switched their sector preference to Total SA, upgrading its rating for the French group to ‘outperform’ from ‘neutral’ as they think Total has the capacity to distribute more to shareholders than BP in 2021-25.

The analysts pointed out that the calculate that the French firm could distribute about a 10.5% annualised yield (dividend and buyback) based on current market value, compared to BP's potential for about 8.5%.

Overall, the Credit Suisse analysts said they prefer European oil supermajors to their US peers on valuation grounds.

They maintain Royal Dutch Shell PLC (LON:RDSA) as is their sector ‘top pick’, retaining an ‘outperform’ rating, albeit while cutting the share price target to 3,090p from 3,175p.

In late morning trade in London, Shell A shares were 0.3% higher at 2,596.50p.

 



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