On Thursday, Evercore ISI resumed coverage on ConocoPhillips (NYSE:COP) with an Outperform rating and an ambitious price target of $165.00. According to InvestingPro data, this target represents significant upside potential, with the stock currently trading near its 52-week low of $101.30. The broader analyst consensus remains bullish, with targets ranging from $114 to $151.
The firm highlighted the company's recent underperformance, which trailed the Energy Select Sector SPDR Fund (XLE (NYSE:XLE)) by approximately 1300 basis points since the announcement of its acquisition of Marathon Oil Corporation (NYSE:MRO). The analyst attributed this lag to market dynamics rather than a fundamental shift in the company's business model.
ConocoPhillips, according to the firm, remains one of the industry’s most efficient operators, and the MRO transaction not only provided accretion but also demonstrated strong industrial logic. The firm anticipates that ConocoPhillips will distribute between approximately $9.5 billion to $10.6 billion to shareholders in 2025, which reflects a 7.4% to 8.3% shareholder yield. This projection is based on current market indicators and would mark a significant increase from the sub-7% yield observed earlier in the year.
The analysis by Evercore ISI suggests that ConocoPhillips has a robust portfolio that combines high-quality unconventional assets with conventional oil-weighted assets, including those in Alaska and Norway.
This portfolio strength is reflected in the company's solid financials, with InvestingPro analysis showing strong cash flows and moderate debt levels. For detailed insights into COP's valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. Additionally, the company's growing LNG platform is considered unique among its peers in terms of both scale and growth potential.
Evercore ISI expects ConocoPhillips' management to maintain their strategic focus and not to be overly concerned with short-term market fluctuations. The firm believes that the intrinsic value of the business model will ultimately be recognized by the market over the longer term.
In other recent news, ConocoPhillips has made significant strides in the energy sector. The company made headlines with the issuance of $5 billion in senior notes, a strategic move backed by strong cash flows sufficient for interest payments. In addition, ConocoPhillips completed its strategic acquisition of Marathon Oil Corporation, a development expected to yield over $1 billion in synergies within the next year.
The acquisition is part of ConocoPhillips' growth strategy, which also includes plans to return $9 billion to shareholders in 2024. This commitment was further emphasized with the announcement of a $2 billion share repurchase for Q4 and a $20 billion increase in share repurchase authorization.
In the third quarter, ConocoPhillips outperformed expectations with a robust performance. The company reported an adjusted earnings per share (EPS) of $1.77, surpassing projections from Susquehanna, which subsequently raised the stock's target price to $148.
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