Analyst Optimism on ConocoPhillips
Analysts are expressing positive sentiments regarding ConocoPhillips (NYSE:COP) as Morgan Stanley (NYSE:MS) resumes coverage with an ‘overweight’ rating. Meanwhile, Mizuho has upgraded the stock to ‘outperform’, mainly due to its underperformance after announcing the acquisition of Marathon.
Mizuho has increased its synergy target for this acquisition to $1 billion annually, which is double its original estimate. Additionally, the company's 2025 capital plan, which aims to stay under $13 billion, is expected to support strong free cash flow generation.
ConocoPhillips is currently trading at a discount compared to large-cap peers based on enterprise value-to-EBITDA ratios, yet it still offers higher free cash flow yields amidst ongoing investments.
According to Mizuho analysts, COP’s expanding LNG footprint and strong commercial marketing position the company well to capitalize on the increasing global LNG demand and favorable international pricing.
Morgan Stanley has set a price target of $128 for COP. Their positive outlook is supported by expected cash flow growth from major projects and strong capital efficiency, as well as Alaskan reserves disclosed between the Willow and Narwhal developments.
“With a more favorable permitting environment expected under a new administration, there may be opportunities for COP to explore additional prospects in Alaska,” mentioned an analyst regarding the potential upside in that region.
Mizuho highlights that the company’s disciplined investment strategy, consistent cash returns, and a diverse, low-cost portfolio uniquely position ConocoPhillips to balance free cash flow generation with growth aspirations.
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