BP's earnings outlook just got a paper boost. AlphaValue/Baader Europe, a European research firm, raised its adjusted earnings per share (EPS) estimates for 2026 and 2027 after revising its assumptions for oil, gas, and refining margins. The move reflects a more optimistic view on near-term energy prices, though the broker kept its cautious stance on the stock.
What changed in the model
The main driver was a higher Brent crude forecast. The firm now sees Brent averaging $91.5 a barrel in 2026, up from its previous $87 estimate, and $78 in 2027, up from $72. For 2028, it left the forecast unchanged at $65. It also raised its assumptions for European natural gas prices and penciled in stronger refining margins for 2026, before stepping those down to $18 a barrel in 2027 and $14.5 in 2028.
Those tweaks pushed the adjusted EPS estimates to $1.17 for 2026 and $0.81 for 2027, while the 2028 figure was trimmed to $0. (The brief cuts off here, but the direction is clear: the near-term outlook improved, but the longer-term picture remains subdued.)
Why the rating stays 'reduce'
Despite the higher earnings estimates, AlphaValue/Baader Europe kept its 'reduce' rating and a price target of 6.36 pounds. That suggests the firm believes BP's shares are still not cheap enough relative to its expected earnings, or that the improved near-term profits won't be enough to offset longer-term challenges.
For everyday investors, this is a reminder that analyst ratings and price targets are not just about the next quarter or two. They reflect a longer view of a company's prospects, including risks like energy price volatility, the transition to cleaner fuels, and the cost of maintaining oil and gas production.
What it means for BP investors
If you own BP shares, this update is a mixed signal. On one hand, higher oil and gas prices could mean stronger profits in the next couple of years, which might support the dividend and share buybacks. On the other hand, the 'reduce' rating and the price target—which is below the current share price—suggest the broker sees limited upside, or even downside, from here.
It's also worth noting that BP's earnings are highly sensitive to oil prices. When Brent rises, BP tends to earn more, but when it falls, profits can drop quickly. That's why analysts spend so much time refining their oil price assumptions.
Broader energy market context
The higher Brent forecasts come at a time when oil prices have been volatile, influenced by global supply, demand, and geopolitical events. Recently, oil's surge has pushed Treasury yields higher, showing how energy prices can ripple through the broader financial markets. For BP, a sustained period of higher oil prices would be a clear tailwind, but the broker's 2028 forecast of $65 a barrel suggests it expects prices to eventually cool off.
Investors should also keep an eye on refining margins, which can be just as important as crude prices for integrated oil companies like BP. The broker's assumption of stronger refining margins in 2026, followed by a decline, reflects the cyclical nature of that business.
What to watch next
For BP shareholders, the key will be whether the company can deliver on its promises of higher returns and lower debt while navigating the energy transition. The broker's price target of 6.36 pounds is a signal that it sees limited near-term upside, but that could change if oil prices stay higher for longer or if BP's operational performance improves.
As always, it's important to remember that analyst estimates are just one view. They can be wrong, and they change frequently. For a balanced perspective, investors should look at a range of sources and consider their own risk tolerance.
In the meantime, the broader market is also watching energy prices closely. With FTSE 100 futures pointing higher as oil slips, the relationship between oil and equities remains a key theme. And for those interested in the energy sector, why jet fuel above $4 matters more than airline earnings is a good reminder of how energy costs affect different industries.
Ultimately, this update from AlphaValue/Baader Europe is a small piece of the puzzle. It tells us that the broker sees better near-term earnings for BP, but it's not enough to change its cautious view. For investors, the takeaway is to stay informed and keep a long-term perspective.
