Broker tips: BP, Segro, JD Sports

(Sharecast News) - Analysts at Berenberg hiked their target price on oil and gas giant BP from 490p to 525p on Wednesday after the group reported "another strong set of results" for its third quarter, driven by good operational performance, rising production volumes and steady progress on cost-reduction programmes. Berenberg said exploration success was improving visibility on future production growth, and could provide "an important source of funds" as some larger discoveries were farmed down.

The German bank also stated BP's $20bn disposal programme was starting to deliver, with roughly $5bn now agreed and processes ongoing for some of the larger pieces - including its Castrol lubricants unit, the Gelsenkirchen refinery and Lightsource BP.

"We believe that falling net debt, combined with an improving outlook across upstream and stronger delivery in downstream, can drive relative outperformance," said Berenberg, which reiterated its 'buy' rating on the stock.

"We have increased our EPS estimates by 6%/3% for 2025/26 respectively, driven by higher gas and refining assumptions. We increase our price target to 525p (from 490p; the ADR increases to $41.50 from $39), based on a target EV/DACF multiple of 5.9x 2027E (previously 6x 2026E)."

Berenberg also took a look at the UK real estate sector on Wednesday and upgraded Segro to 'buy' from 'hold'.

Berenberg, which also lifted its price target on the stock to 1,056p from 978p, said the investment case was turning more constructive after a period of weak share price performance and softer occupier demand for industrial warehousing.

"The company's recent Q325 update highlighted improved occupier demand, stable occupancy, and improved pre‑letting activity than in its recent history," said the German bank.

"With embedded rent reversion, a growing data centre platform, and a balance sheet now in a more comfortable position, we believe that Segro is well positioned to deliver sustainable medium‑term EPS growth of circa 6% per year over the next five years, thereby offering investors renewed confidence in its long‑term earnings trajectory."

Shore Capital has highlighted a "buying opportunity" for investors of JD Sports following the sharp contraction in the share price over the past week.

The stock, which at the end of October had topped its 200-day moving average at close to 100p, has dropped 15% to just 85p since the start of November, with no obvious triggers.

"This recent weakness has us somewhat scratching our heads looking for a catalyst but in truth it is likely a combination of more macro-events," the broker said, noting the negative impact of hawkish comments from the Federal Reserve on US consumer stocks, and fears about potential UK tax rises.

"When you combine this environment with the fact that share JD shares went ex-dividend five days ago at which point shares were up c.20% in the past six months, we understand that investors may have taken the opportunity to reduce positions," Shore Capital said.

Nevertheless, Shore Cap still thinks the business has been set up well for the short term, despite some recent weakness in underlying sales, with a strong balance sheet, strong margins and high cash generation.

"While the macro environment is a challenging one, we maintain our view that JD remains well-placed to succeed in the medium-term and thus see this recent weakness as a buying opportunity," the broker said.