Analysts’ ratings for Phillips 66
Phillips 66 (PSX) is analysts’ third-favorite refining stock among the six under our review. Marathon Petroleum (MPC) and Valero Energy (VLO) have been rated as “buys” by 94% and 84% of analysts, respectively. Now, let’s review PSX’s ratings.
Thirteen (or 72%) of the 18 analysts covering Phillips 66 have rated it as a “buy” this month. Another five analysts have rated it as a “hold.” PSX has a higher number of “buy” ratings despite the expected 17% year-over-year fall in its second-quarter earnings.
Phillips 66 has seen mixed target price changes. While Cowen and Company has cut its target price on Phillips 66 stock from $118 to $106, Citigroup has raised its target price on the stock from $102 to $104. PSX’s mean target price of $116 implies a potential upside of 29% from its current level.
Why Phillips 66 has positive ratings
Phillips 66 has a comfortable debt position. In the first quarter of 2019, the company had 30% debt in its capital structure, while its peers Marathon Petroleum (MPC) and Valero (VLO) had debts of 39% and 32%, respectively.
Moreover, Phillips 66 has an integrated earnings model. The company earns not only from its Refining segment but also from its Midstream, Chemicals, and Marketing segments. It plans to grow these segments via capex and acquisitions. For more on Phillips 66’s growth, read Phillips 66 Focuses on Midstream Expansion and Refining Upgrades.
Phillips 66 may have positive ratings due to its diversified and growth-oriented earnings model in addition to its healthy financials.