Aker BP (OB:AKRBP) Could Be 43% Below Fair Value On New Norway Deals
Aker BP (OB:AKRBP) is back in focus after agreeing to acquire stakes in the cross border Losgann/Froskelår discovery and the Slagugle area, both located near its existing Norwegian infrastructure.
See our latest analysis for Aker BP.
The news has arrived as Aker BP’s shares trade at NOK351.9, with a 1 month share price return of 8.54% and a year to date share price return of 35.40%. The 1 year total shareholder return of 55.78% points to strong longer term momentum.
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Aker BP’s latest deal-driven move near Alvheim and Skarv has already rewarded holders, yet the stock still trades at a reported intrinsic discount of 43.05%. How much of the upside is realistically left on the table?
Most Popular Narrative: 7% Overvalued
The most followed narrative pegs Aker BP’s fair value at NOK329.25, which is below the last close of NOK351.9, so the market is paying a premium.
The analysts have a consensus price target of NOK329.25 for Aker BP based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NOK390.0, and the most bearish reporting a price target of just NOK200.0.
Want to see what kind of production profile, margin path and future earnings multiple need to line up for that fair value to make sense? The narrative sets out a detailed earnings road map and leans on a specific profit margin uplift and modest revenue growth to justify its conclusion.
Result: Fair Value of NOK329.25 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, Aker BP’s reliance on a handful of large fields and exposure to shifting emissions costs could quickly challenge the earnings and margin path behind this narrative.
Find out about the key risks to this Aker BP narrative.
Another View: SWS DCF Model Points To Deep Upside
The analyst narrative argues Aker BP is about 7% overvalued at NOK351.9 versus a fair value of NOK329.25. Our DCF model points the other way, with an estimated value of NOK617.91 per share, or a 43% intrinsic discount. Which set of assumptions do you trust more?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Aker BP for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 270 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mixed picture around Aker BP leaves you unsure, take a closer look at the underlying data and form your own judgement quickly. Then weigh up the 3 key rewards and 2 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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