LONDON (ShareCast) - Bank of America Merrill Lynch (BofA) has maintained its 'buy' rating and 540p target price for BP (LSE: BP.L - news) , saying that the stock remains a top pick amongst European oil majors after a capital markets day from Rosneft delivered a 'confident message'.
Rosneft, in which BP holds a 19.75% stake, "gave a confident and well-received strategy presentation" at its capital markets day in London on Tuesday, according to BofA.
"In our view, management communicated a strong focus on creating shareholder value whilst transforming Rosneft into a global oil major," the broker said.
BofA said that Rosneft gave a detailed breakdown of a $10bn of synergy target, higher than BP's previous indications, and provide a roadmap of integration of TNK-BP, "which we believe could create significant shareholder value and attract growth opportunities".
Rosneft also highlighted intentions to increase data disclosure levels and transparency, said it would extract value from under-appreciated gas reserves, and declared a strong commitment to the 25% dividend payout policy.
BofA reckons that Rosneft will be a "key growth driver and source of value creation" for BP.
"In particular BP's stake in Rosneft gives it: (1) advantaged resource access; (2) benefit from Rosneft's significant growth opportunities; and (3) benefit from synergy gains, which have now been quantified at $10bn."
The stock was up 0.96% at 456p by 09:57 on Wednesday.