Key Takeaways
- The company’s pivot away from renewables and fresh leadership direction should put it on a surer footing, Morningstar’s analyst says.
- However, the BP share price faces significant uncertainty and the stock does not qualify for a Morningstar economic moat rating because of this vulnerability.
- The stock’s latest rally has left it trading higher than Morningstar’s fair value estimate.
Ollie Smith: BP BP. investors are enjoying a bumper year, aided in large part by elevated oil prices. But the company, which is one of two London-listed oil majors, has also made history in 2026. New chief executive Meg O’Neill is the first woman to lead an oil major, and Morningstar’s analyst says her corporate plan puts the company on a stronger footing.
The BP share price reflects this momentum after years of underperformance. Indeed, in a period dominated by dramatic oil price movements, BP stock has climbed 29.96% in the year to date through Sept. 22, positioning it for its best annual gain since 2022, when it climbed 50% in the wake of the Russia-Ukraine energy shock. But is BP’s progress sustainable and, moreover, is its stock a buy?
Why Are BP Shares Up Nearly 30% in 2026?
Sustainable is the operative word. To the chagrin of environmental campaigners, BP has leaned away from renewables. Morningstar director of equity research Allen Good says that the company is now on the correct course, but must still address “relatively higher debt” and improve its production growth outlook.
Here, he compares the company’s performance to its London-listed peer Shell, which performed a similar pivot several years ago. Last year, Shell publicly denied it was seeking to bid for BP, but with the pace of UK M&A not abating, the flow of speculation about BP’s future has not yet been arrested.
Is BP Stock Overvalued After Its 2026 Rally?
More than most multinationals, BP is vulnerable to geopolitical uncertainty. Oil is currently holding above 100 dollars a barrel amid ongoing disruption to Middle East supplies, but nobody knows what it will be in a month—let alone a year.
At its last results for Q2, BP delivered an increased dividend and better profits compared with Q1. But with O’Neill herself admitting there is still work to be done to strengthen the company’s balance sheet and compete more aggressively, BP is not yet the standout stock pick investors might be hoping for. BP’s share price is trading at GBP 5.47, that’s a touch above Morningstar’s fair value estimate of GBP 5.30. That makes it marginally overvalued.
Investors will now have to wait for Q3 results on Oct. 30 to see whether there will be any material change to the company’s valuation—and whether O’Neill is making the progress analysts agree is so necessary. For now, talk of a definitive BP turnaround seem to be premature. For Morningstar, I’m Ollie Smith.
