J.P. Morgan is the first major brokerage to initiate coverage of Saudi Aramco with an "overweight", setting a price target of 37 riyals ($9.86) per share and saying it sees scope for an increase in the energy giant's proposed $75 billion base dividend.

Goldman Sachs on Tuesday rated the company "neutral" with a price target of 41 riyals while HSBC on Wednesday initiated coverage of Aramco with a "hold" rating and a target of 36.80 riyals. Bernstein and Jefferies both initiated coverage of Aramco last month with "underperform" ratings saying the company had been priced at a premium to international oil majors in its December IPO despite governance issues.

"Our bullish view is predicated on its dividend growth outlook, with scope to increase the $75 billion baseline as production scales up," J.P. Morgan said in a note. J.P. Morgan said Aramco's ability to sell its oil at a premium, capital expenditure flexibility and low debt to equity ratio would allow it to distribute a higher percentage of cashflow.

The brokerage said Aramco is uniquely positioned to raise production with minimal incremental capital expenditure. It said it could see Saudi production capacity rising to 15 million bpd from the current 12 million and production of 10 million citing increased appetite by the kingdom to regain its share of global oil demand growth as oil markets tighten. J.P. Morgan was one of nine global coordinators on Aramco's IPO, which raised a record of $29.4 billion including a greenshoe allocation of extra shares.