UPDATE: Deutsche Bank Initiates Coverage On ConocoPhillips, Sees 16.3% Upside
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.”
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
|Sep 2014||Bank of America||Upgrades||Underperform||Neutral|
|Aug 2014||Simmons & Co.||Upgrades||Neutral||Overweight|
|Aug 2014||Argus Research||Maintains||Buy|
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