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Why BP Is Still a 'Buy': Oil Analyst

BP shares have tumbled more than 25 percent since the explosion in the Gulf coast last month, but are trading higher Thursday. Is this a good time to get into the firm? Mark Gilman, oil analyst at The Benchmark Company, shared his insights.

“This [scenario] is buying when you believe that an event is being overly discounted by the valuation that’s currently in place,” Gilman told CNBC.

Gilman’s firm upgraded the oil giant to “buy” from “hold” with a $49 price target yesterday.

“We focus on the dividend and the yield—nearly 7.9 percent as we changed our position yesterday," he explained. "And so in this interest rate environment, one’s being paid to wait."

Gilman also noted that BP has a balance sheet that is capable of absorbing a $20 billion hit “without exaggerating financial ratios to a level that would cause any degree of distress or concern in the dividend.”

Scorecard—What he Said:

  • Gilman's Previous Appearance on CNBC (Mar. 17, 2010)

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More on the BP Oil Spill:

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Bookmark CNBC Data Pages:

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CNBC Slideshows:

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BP Competes With:

Chevron

Exxon Mobil

ConocoPhillips

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Disclosures:

Gilman does not own shares of BP.

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Disclaimer