Thursday, June 10, 2010

"J.P. Morgan on BP Share Price: ‘Has Overshot a Worst Case’" (BP)

The stock is up 8 1/2% at $31.68.
From MarketBeat:
BP’s 16% plunge in U.S. trading Wednesday, only reinforces belief among J.P. Morgan Cazenove analysts that there is a buying opportunity here, despite the massive catastrophe that is the Gulf oil spill.
BP depositary shares are up about 9.6% early Thursday. J.P. Morgan Cazenove analysts write:
BP’s loss of relative value has overshot a worst case - The sum of clean up costs ($5bn), a fine under the Clean Water Act ($8.1bn) and litigation ($16bn) is around $29bn. In order to stay below a 30% gearing threshold, this might require asset divestments of $10bn. Adjusted for the sector’s weakness, BP’s market value has fallen by twice this figure.
Of course, it’s easy to say that you should buy when others are fearful and some of the ultimate costs to BP estimates out there are higher. The problem is, it’s really frigging scary to buy into a stock that’s shuddering the way BP has been....MORE
 See also "British Petroleum: A Month From Chapter 11? (BP)" for lots o'links.