Melius Research has moved BP's stock rating from Hold to Sell and set a price objective of $31.00, a notable gap below the stock's recent trading level of $36.97. Market data indicate the shares have been trading close to a 52-week peak of $39.51.
The downgrade reflects Melius' view that BP's attempt to recalibrate its portfolio toward traditional oil and gas activities - after an aggressive push into cleaner-energy projects that the research firm considers to have delivered disappointing returns - faces significant execution risk.
Leadership and strategic consistency
Melius flagged personnel turnover at the top of the company as a material concern for consistent strategy delivery. The firm noted that BP has had five chief executives over the last decade and three different chairmen in that period, an environment it said complicates sustained strategic execution.
Shareholder returns and valuation
Despite those governance worries, BP has maintained dividend distributions for 35 consecutive years and currently yields 5.35% on an indicated basis. Melius nevertheless questioned BP's ability to generate shareholder value in the near to medium term, stating that the company has not created shareholder value in nearly three decades. The research house suggested the company's portfolio might produce better outcomes under alternative ownership structures, such as a takeover or a breakup, and pointed to potentially superior alpha opportunities in other parts of the energy complex.
Timing of a turnaround
The analyst team at Melius expressed skepticism about how quickly BP's self-help initiatives can translate into meaningful market recognition, observing that companies attempting to rebuild exploration strength typically struggle to gain momentum in the early stages of a commodities cycle.
Quarterly results
BP's fourth-quarter 2025 financials painted a mixed picture. The company reported an underlying replacement cost profit of $1.5 billion for the quarter, while recording an IFRS loss of $3.4 billion after identifying roughly $4 billion of impairments. Melius and other market watchers view those figures as coming against a difficult oil-price backdrop that has weighed on reported outcomes.
Even with the impairment charge and the IFRS loss, the stock has shown resilience, trading near its highs. BP continues to implement strategic adjustments as it navigates current market conditions, and investors and analysts are closely watching how the company balances near-term financial pressures with longer-term portfolio shifts.
How this affects markets
- Energy sector sentiment may be pressured by a Sell rating on a major integrated oil company.
- Dividend-focused investors will weigh BP's consistent payments against the firm's strategic and governance concerns.
- Commodity-linked equities could be impacted if skepticism about early-stage turnarounds widens among research firms.