Broker snap: Nomura keeps neutral rating for BP

7th Feb 2012 11:19

Nomura has reiterated its neutral rating and 500p target for oil titan BP saying that while the 14% increase in the quarterly dividend is welcome, the Macondo oil settlement remains 'the elephant in the room'.Adjusted replacement cost operating profit came in at $4,986m, above both consensus and Nomura's estimates. The fourth quarter dividend was also raised to eight cents a share, while the broker was forecasting seven. However, Nomura highlights the group's guidance for flat volumes in 2012, saying that it is disappointing for the bulls as some estimates had predicted a 3% rise year-on-year."Ultimately, 'the elephant in the room' remains a potential wider settlement on Macondo and there was little update on this. We believe on balance a settlement should be supportive given BP has on many occasions stated that it is willing to settle 'but not at any price'," the broker said."With this in mind and in the backdrop of a relatively weak quarter from its key UK peer Shell, we think the shares are well underpinned."Nomura says that the delivery of high-margin US Gulf of Mexico barrels and a sustained period of exploration success would see a more material re-rating but this may not happen until 2013/14.BP's shares were down 1.34% in mid-morning trade to 483p.BC