UPDATE: Citigroup Initiates Phillips 66 with Buy, $40 PT; Diversified Portfolio, Assets

Citigroup initiates its coverage on Phillips 66

with a Buy rating and a price target of $40. Citigroup comments, "PSX represents a portfolio of assets that is levered to growing hydrocarbon production in North America. Its refining assets are situated near major delivery points of crude oil production from Canada and the interior US. Its chemical assets are taking advantage of cheap US feedstocks. Its midstream and pipeline assets are taking advantage of the growing volume of hydrocarbons in the US. PSX's key strategy is to deploy 50% of its capital into the chemical and midstream business where we estimate it will generate higher risk adjusted returns than on refining." PSX closed at $31.03 on Monday.