BP share price outlook ahead of Q1 earnings: buy, hold, sell?

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BP (LON: BP) share price has moved sideways in the past few weeks as investors assess the trends in the energy market. It also wavered ahead of the upcoming quarterly earnings scheduled for Tuesday this week. The stock was trading at 534.4p on Friday, a few points below the year-to-date high of 570.3p. 

BP earnings preview

One of the biggest energy news of the week will be the upcoming earnings from BP, one of the biggest companies in the industry. The company is expected to have mixed results because of the trends in the energy sector in the first quarter.

Crude oil prices remained in a consolidation phase in Q1 as it hovered between the key resistance at $89 and $70. They remain about 42% below the highest level in 2022. And the recent supply cuts by OPEC seem not to be working since Brent has dropped by almost 10% from the highest point in April.

BP is also a major player in the natural gas industry. As I wrote here, the price of natural gas has plunged sharply in the past few months because of the relatively low demand from Europe and the increased LNG shipments.

Therefore, BP’s revenue is expected to be significantly lower than what it averaged in 2022. Its profitability, however, will be higher on a year-on-year basis since the company took charge of its Russian business in Q1 of last year.

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Analysts also expect that its asset disposals helped to boost its profits in the quarter. Expectations are that the company’s earnings came in $5.1 billion in the quarter, helped by these disposals and working capital inflows. In a note, analysts at Jefferies wrote that:

“This should theoretically allow buybacks to grow above the current run rate US$2.75bn but we think BP will leave the buyback flat in order to create headroom ahead of planned outflows in the coming quarters.”

Analysts expect that the company’s revenue will come in at $58.4 billion and its earnings per share will be $1.29. In the last quarter, the company’s revenue was $69.26 billion and EPS $3.50.

BP share price forecast

BP chart by TradingView

The BP stock price has been in a strong bullish trend in the past few months. During this period, the shares have remained comfortably above the 50-day and 100-day exponential moving averages (EMA). It has also formed an ascending channel shown in green. The shares have moved slightly above the neutral point of this channel.

Therefore, at this stage, the outlook of the stock is neutral with a bearish bias. This bearish bias will be confirmed if the stock moves below the neutral point. If this happens, the next level to watch will be at 500p. A retest of the upper side of the channel at 551p cannot be ruled out.

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