Mizuho increased ConocoPhillips’s target price

On June 26, Mizuho increased its target price on ConocoPhillips (COP) by $6 to $80 and changed its rating from a “neutral” to a “buy.” On June 25, COP closed at $59.77.

Among the 20 analysts tracking ConocoPhillips stock, 35% have given it “holds,” while 65% have given it “buys,” according to data compiled by Reuters. No analysts have recommended “sells” on the stock.

Why Mizuho Increased Its Target Price on ConocoPhillips

On June 20, UBS reduced its price target for ConocoPhillips (COP) by $2 to $70. On June 14, BMO reduced its target price on ConocoPhillips from $71 to $70.

Second-quarter earnings results

On May 20, COP announced that it would report its second-quarter earnings results on July 30. Based on analysts’ consensus estimates, ConocoPhillips’s adjusted earnings could rise 10% sequentially. However, at the midpoint of its management’s guidance, its total production (excluding its Libya operations) could decline by 58,000 barrels per day, which could dent its revenue by 5.3%, according to Reuters estimates. But if COP decreases its production and operating costs like it did in the fourth quarter of 2018, then its lower revenue could translate into a higher EPS realization.

Moreover, US crude oil active futures and Brent futures, on average, were 9.2% and 7.3% higher in the second quarter of 2019 than in the previous quarter. This rise could help COP to adjust its losses arising from lost barrels. ConocoPhillips operates with a production mix of 65.2% in oil price–linked commodities and the rest in natural gas.

Mean target price

Analysts’ mean target price for ConocoPhillips is $77.25, which implies a potential upside of ~29.2% based on its last closing price. In comparison, the target prices for Occidental Petroleum (OXY) and Pioneer Natural Resources (PXD) suggest potential upsides of 28.1% and 35%, respectively.

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