MARKET TALK: Goldman Takes A Fresh Look At BP, Sees Upside

11th Jun 2010 08:32

0732 GMT [Dow Jones] Goldman Sachs takes a fresh look at BP (BP), and notes its shares have fallen 12% this week, due to increased pressure on management from the US administration, however no material negative news came through in terms of the size or potential cost of the oil spill, according to Goldman. It says shares have now fallen 42% since the accident, implying the market is discounting around $33B of post-tax damages from the spill, equivalent to $40B-$50B on a pretax basis, at the upper end of Goldman's estimated liability range. The bank therefore says the risk/reward is now tilted to the upside. However it keeps a neutral rating given the uncertainty over the level of damages and on potential funding problems in the event that a material amount of these liabilities mature within the next 12-24 months. It sees superior risk/reward in Shell (RDSA) and Statoil (STO), both rated as conviction buys. BP shares +3.7% at 379p. ([email protected]) Contact us in London. +44-20-7842-9464 [email protected] (END) Dow Jones Newswires June 11, 2010 03:32 ET (07:32 GMT)