Wall Street analysts’ recommendation
Based on Reuters data from 22 analysts tracking ConocoPhillips (COP), 45% recommended “holds,” 55% recommended “buys,” and none recommended “sells” on the stock. On February 11, Piper Jaffray increased its target price on COP by $7 to $75.
No “sell” recommendation on ConocoPhillips
There were no “sell” recommendations on COP, according to data compiled by Reuters. COP’s robust earnings might have boosted analysts’ view on the stock. Moreover, in the current scenario, COP might have the most profitable production portfolio among US upstream companies. Of COP’s total oil production, 38% is benchmarked relative to Brent crude oil prices. Because of weakening oil supply outside the US, the Brent-WTI spread moved above $9 on February 13. Moreover, COP’s income sensitivity to Brent crude oil and higher realized oil prices might further increase investors’ confidence in the stock. In fact, so far this month, COP is the third highest outperformer among the S&P 500 Index’s (SPY) holdings in the upstream sub-sector.
US crude oil production at its record level of 11.9 MMbpd (million barrels per day) might limit the upside in WTI compared to Brent crude oil prices. Because of this pricing mechanism, US-focused upstream stocks like Chesapeake Energy (CHK), Oasis Petroleum (OAS), and others could be at a disadvantage. Apart from these factors, COP’s ability to sustain at lower oil prices compared to its peers is another positive factor for the stock prices.
Mean price target
The mean price target for COP in the next year is $77.42, implying a potential upside of ~14.2% from its last closing level. For other top holdings of the S&P 500 Index in the upstream subsector like EOG Resources (EOG) and Occidental Petroleum (OXY), the mean target price suggests an upside potential of 29.4% and 22.4%, respectively.