2024 has been quite rough for BP (LSE:BP.) investors, with the share price dropping by nearly a third since April. Year-to-date, the stock is down almost 20%, which seems to be a fairly consistent trend across British energy companies, given the recent softness in oil & gas prices.
However, a falling share price also potentially creates a solid jumping-off point for a comeback. And the latest 12-month share price forecasts from analysts suggest that might just happen next year. In fact, one analyst predicts the stock could rise by as much as 70% by this time next year!
December 2025 forecasts
Electricity demand is expected to continue rising next year, driven by increased adoption of electric vehicles as well as consumption of data centres powering AI machine learning models. Since renewable infrastructure still isn’t up to par, oil & gas prices are expected to rise throughout 2025, giving BP a welcome growth tailwind.
With that in mind, it’s not too surprising to see positive share price predictions coming from City analysts.
| Opinion | 12-Month Share Price Target | Potential Gain/Loss |
| Optimistic | 652.22p | +69.2% |
| Average | 452.38p | +17.4% |
| Pessimistic | 401.24p | +4.1% |
Looking at these figures, it seems that even in the worst-case scenario, there’s room for some positive moves. So, does that make BP shares a top stock to buy now?
Not necessarily. It’s important to remember that forecasts are not guaranteed, especially for complex commodity-driven companies like BP. And digging a bit deeper into analyst opinions reveals a trend that gives me some pause.
Most analysts have put BP on hold
Despite the expected upward trajectory of this energy stock, the number of analysts who think BP shares are worth buying today has significantly fallen from 15 in December 2023 to just eight today.
| Recommendation | Strong Sell | Sell | Hold | Outperform | Buy |
| December 2023 | 0 | 1 | 6 | 9 | 6 |
| December 2024 | 0 | 1 | 15 | 4 | 4 |
What’s going on here? There are a lot of factors influencing BP’s operational and financial performance. However, a rising concern surrounding this business is the emerging legislation linked to project development in the North Sea.
In July 2024, the UK Supreme Court ruled that planning authorities for oil & gas projects now must consider both operational and end-up emissions before granting any regulatory approvals. In other words, the government’s push to be more environmentally friendly is creating new carbon-reduction headwinds for this enterprise.
Of course, BP doesn’t operate exclusively in this region. But it nevertheless adds new uncertainty to the firm’s longevity if it can’t successfully transition to a renewables-dominant business – a process that’s also proving challenging.
The bottom line
BP is in a bit of a tight spot. Pressure to move towards renewables puts the shares in what’s being described as a “valley of death“. Oil & gas investors aren’t interested in owning an energy business transitioning to renewables. However, at the same time, green investors aren’t interested until renewables become the dominant energy source in their portfolio.
Needless to say, this adds quite a bit of uncertainty. So, while shares are likely to benefit from rising energy prices next year, this isn’t a business I’m rushing to add to my portfolio.
This post was originally published on Motley Fool
