Shares digital

BP (BP.) 548.5p

The oil giant will cut 5,000 jobs after profit fell 22% last year. Analysts believe a recovery is possible as restructuring plans kick into action. (Read the full story: www.sharesmagazine.com/node/3132)

Shares says: BP remains in the shadow of Royal Dutch Shell, which reported record profit for a UK company as earnings grew 9% to nearly £14 billion in 2007. It has struggled with lower margins and production problems with its US refineries, which sent its refining and marketing operation to a fourth-quarter loss of $1.34 billion. But a higher dividend is welcome and reserves are being replenished. Focus on the restructuring rather than the disappointing numbers. BUY

The Times says: The company lost $192 million worldwide in refining and marketing but a hefty $834million in the US – nearly twice the level of the previous year. Although the company reported an above-forecast performance in its upstream operations, the benefit was offset by a higher tax charge. With the problems in the US refineries nearly resolved – which will reduce the drag from heavy repair and maintenance spending – the focus should return to Mr Hayward’s restructuring efforts and BP’s newer producing assets. On the view that BP’s long period of underperformance against Shell is nearing its end, the shares – yielding 5% and trading at nine times’ 2008 earnings – are worth tucking away for the long term. BUY

The City - Barclays says: The fourth-quarter results are somewhat disappointing but should mark a low point. 2008 should see the start of a turnaround in BP’s fundamental fortunes. Earnings are increasing by as much as 15%, largely reflecting a stronger result from the exploration and production division and better results from refining and marketing as refineries come back on stream. BUY

The City - Dresdner Kleinwort says: The key to restoring BP’s profitability is getting the US downstream to work properly. We believe there are clear signs of progress. BUY