Oil and energy analysts at JPMorgan are working under the assumption that the price of oil will be "capped in a lower but firmer" range of $40 to $60 a barrel, and this presents certain challenges for European integrated names.
"To us, the burden of proof lies in the positive trending of cashflow growth, FCF dividend coverage and gearing. Leading indicators to watch include quarterly capex/opex intensity ($/boe), CFFO and cash break-evens," the analysts wrote.
The analysts added that EU oil stocks are trading on a 13.5x 2018E P/E, which is "inexpensive" relative to the market. Nevertheless, there are some winners and losers in the space.
The analyst note has come at a bit of an
Winners And Losers
BP plc (ADR)
Two of the analysts' top listed names, BP and Royal Dutch
On the other hand, the analysts are Underweight on Eni SpA (ADR)
|Nov 2016||Societe Generale||Downgrades||Buy||Hold|
|Jun 2016||Morgan Stanley||Upgrades||Equal-Weight||Overweight|
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