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UPDATE: Deutsche Bank Initiates Coverage On ConocoPhillips, Sees 16.3% Upside

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ConocoPhillips (NYSE: COP) was initiated with a Buy rating at Deutsche Bank with a $94 price target (16.3 percent upside) Tuesday morning.

Analyst Ryan Todd likes ConocoPhillips’ free cash flow (second highest yield in the sector), dividend and long-term strategy.

“COP’s attack is balanced: Volume growth is 50% US unconventional, 50% offshore/international, and cash flow growth is 50/50 volume/margin growth,” starts Todd. “A steady string of margin-accretive projects should support ~4%/yr cash margin growth through 2017, while a strong balance sheet and FCF boost COP’s debt-adjusted cash flow growth into the top quartile of E&P peers.”

Related: Deutsche Bank Initiates On Chevron, Sees 14% Upside

Todd also commented on ConocoPhillips’ upstream business, “Providing ~50% of growth volumes through 2017, we see potential upside on high asset quality, long inventory life (17 yr avg.), conservative activity levels and solid emerging basins (Permian, Montney, Duvernay, etc).”

The $94 price target is based on a 6.6 times forward EV/DACF multiple, which is a small discount to the peer group.

Shares of ConocoPhillips last traded at $80.85, unchanged Tuesday morning.

Latest Ratings for COP

DateFirmActionFromTo
Apr 2015Edward JonesDowngradesBuyHold
Apr 2015NomuraInitiates Coverage onNeutral
Mar 2015Goldman SachsInitiates Coverage onNeutral

View More Analyst Ratings for COP
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Ryan ToddAnalyst Color Price Target Initiation Analyst Ratings

 

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