Bank of America Sees Gross Negligence Verdict Priced In for BP plc

In a report published Friday, Bank of America analyst Christopher Kuplent reiterated a Buy rating and $55.00 price target on

. In the report, Bank of America noted, “The US District Court investigating the 2010 Macondo oil spill yesterday found BP grossly negligent under the US Clean Water Act. No decision on corresponding penalty payments has been made and BP responded it will appeal against the decision in the US Court of Appeals for the Fifth Circuit. We calculate maximum penalty payments under gross negligence would increase BP's provisions by ~$14bn (~10% of market cap). While we accept less quantifiable uncertainties remain, we leave our Buy rating and 540p PO intact as our valuation already reflects a ~50p discount worth the maximum level of fines under gross negligence. We also believe the decision does not put BP's dividend policy at risk – we calculate balance sheet headroom of >$20bn to pre-Macondo gearing levels.” BP plc closed on Thursday at $44.89.