Phillips 66: Do Analysts Like the Stock?



Analysts’ recommendations

Currently, Phillips 66 (PSX) is covered by 19 analysts. Analysts’ ratings for the stock have improved in the past year. In February 2018, only 35% of the analysts recommended a “buy,” while 10% recommended a “sell” or “strong sell.”

In February 2019, 12 (or 63%) of the 19 analysts recommended a “buy” or “strong buy,” while seven analysts recommended a “hold.” None of the analysts recommended a “sell” or “strong sell.” Analysts’ ratings have improved with more “buy” ratings and no “sell” ratings. Phillips 66’s mean target price of $119 per share implies an ~25% gain from the current level.

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More analysts like Phillips 66

Phillips 66 posted a strong set of numbers for 2018. The company’s adjusted earnings rose 141% to $5.8 billion. Phillips 66’s cash flow from operations rose 108% YoY to $7.6 billion in 2018. Phillips 66’s earnings rose across its business segments. The company has created an integrated and diversified business model. We’ll discuss Phillips 66’s earnings mix later in the series.

Phillips 66 has growth projects in the Midstream segment and modernization projects in the Refining segment, which could drive its earnings.

Phillips 66 has a comfortable debt position. The company’s liquidity position has also improved. The improved liquidity gives the company financial strength to continue with its growth activities despite volatile business conditions. We’ll discuss the company’s debt and liquidity in Part 3 and Part 4.

Peers’ ratings

Marathon Petroleum (MPC) and Valero Energy (VLO) have been rated as a “buy” by 100% and 70% of the analysts, respectively. Other players including Delek US Holdings (DK), PBF Energy (PBF), and HollyFrontier (HFC) have been rated as a “buy” by 56%, 47%, and 22% of the analysts, respectively.


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