On Tuesday, Aker BP (NYSE:BP) (AKERBP:NO) (OTC: DETNF) experienced a downgrade in stock rating by Kepler Cheuvreux from 'Buy' to 'Reduce', accompanied by a significant drop in the price target to NOK200.00 from the previous NOK310.00. The downgrade comes as the firm anticipates a downturn in oil prices, potentially affecting the Norwegian oil company's financials.
The revision in rating and price target is attributed to a forecasted decline in oil prices to USD60 per barrel. Kepler Cheuvreux has adjusted its Brent and natural gas price assumptions, citing these changes as the sole reason for the updated outlook on Aker BP. The firm emphasizes that the decision is based on macroeconomic factors rather than company-specific issues.
According to Kepler Cheuvreux, the lowered oil price expectations are likely to impact Aker BP's free cash flow negatively. This anticipated strain on finances is particularly concerning as the company is entering a period of high capital expenditure. The adjustment in the price target reflects the potential risks posed by the combination of reduced oil prices and increased spending.
The firm notes that the reduced earnings forecast is a result of the lowered assumptions for both short-term and long-term oil prices. This adjustment, particularly for Brent crude, is expected to place additional pressure on Aker BP during a time when financial flexibility could be crucial.
Kepler Cheuvreux's updated stance on Aker BP indicates caution due to the macroeconomic environment, signaling potential challenges ahead for the oil company as it navigates a period of anticipated lower oil prices and high capital expenditures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.