After generating results beyond expectations, BP plc (NYSE:BP) was upgraded today by Goldman Sachs (NYSE:GS) from "Neutral" to "Buy" on the stronger-than-expected quarter and valuation.
Citing the attractive valuation whereby BP is trading at a 2011E 14% EV/DACF discount after paying out liabilities after the Gulf of Mexico oil spill, they see the company beginning to come back.
There is also light at the end of the tunnel for selling off its assets, which is probably more of a positive than most analysts and commentators note, as it's helping them to whittle down the non-core assets to be a much stronger company over time. So far they've raised about $14 billion, with another approximate $16 billion targeted for sale within the next year.
That puts them in a more predictable light, which makes shareholders and investors less nervous.
Goldman also likes that BP raised their earnings per share estimates for the next three years.
Finally, the reinstatement of the dividend, which is gaining steam, could end up with the income investor base returning said Goldman.
Goldman sees them reinstating the dividend at probably $0.08, and over the next couple of years increasing it to about $0.11.
BP closed Wednesday at $42.37, gaining $0.95, or 2.29 percent.
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