Shares of Beach Energy Ltd (ASX: BPT) traced higher in May, clipping a 7% gain while the benchmark S&P/ASX 200 Index (ASX: XJO) fell 2.7%.
Beach Energy shares have been trading higher since December 2021, extending the upside after a recent breakout in May, as seen on the chart below.
After trading below the established support level, the Beach Energy share price stretched from a low of $1.58 in May to now trade at $1.85 apiece at the time of writing.
Can the Beach Energy share price extend gains in June?
Analysts at JP Morgan vote yes to that effect and in April valued Beach Energy at $1.90 per share. The broker was constructive on Beach, and now "sit[s] well above consensus" regarding the company's forward earnings estimates.
"We think Beach provides good exposure to a diversified suite of assets in Australia," the broker said.
"Net debt is close to zero and therefore Beach has the strongest balance sheet of the large caps under our coverage."
JP Morgan said the boost from its most recent earnings was one tailwind Beach was set to realise this year.
Buoyant oil prices have propped up the company's revenue, driving a revenue result 16% higher than its estimates.
Brent Crude oil has surged north since May and is now lifting back towards previous highs at US$120 per barrel. Its correlation with the Beach Energy share price is seen above.
Beach management said production guidance of 21–23 million barrels of oil equivalent (Mmboe) was on track for FY22.
The broker reckons this run rate coupled with rising oil prices is sure to result in earnings growth:
Incorporating the quarterly result into our modelling, results in an 11% upgrade to our full year NPAT [net profit after tax] estimate to A$527 million. We are now 9% above consensus for FY2022.
Wider analyst sentiment is largely bullish for Beach, with 76.5% of analysts covering the stock rating it a buy, according to Bloomberg data.
However, 18% of broker coverage rates it a sell or to underperform. In contrast, the consensus price target reaches $1.91 per share from this list.
In the last 12 months, the Beach Energy share price has surged 37%, having secured a 48% gain this year to date.
