UPDATE: Credit Suisse Reiterates Outperform Rating, Raises PT on Phillips 66
In a report published Friday, Credit Suisse Group reiterated its Outperform rating on Phillips 66 (NYSE: PSX), and raised its price target from $60.00 to $70.00.
Credit Suisse noted, “After the PSX analyst day, we raise our longer-term earnings by $0.5bn and our TP to $70/sh (from $60/sh) (34% higher than current). Our mid-cycle EPS rises by c13% to $7.45/sh, which is 20% above 2014/15 consensus and puts PSX on 7.0x ‘mid-cycle' earnings - hardly expensive. Although PSX shares have been on a roll, there is more upside to play for. Our theoretical valuation is closer to $90/sh. Indeed were retail/logistics at fair MLP value and if free cashflow over the next few years was used to buy back stock, we could argue the refining and chemical businesses are almost ‘free' at the current share price. There are some 1Q13 headwinds for the refiner group to push through - notably an expected compression in WTI-Brent, but the mid-cycle earnings power of PSX (and its peers) is clearly not yet reflected in the valuation. We are revising our 2012/2013/2014 EPS estimates to $8.05/$6.77/$7.43 (from $8.07/$6.55/$6.59) respectively.”
Phillips 66 closed on Thursday at $52.21.
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