Market Overview

ConocoPhillips 'Exhibiting Capital Discipline,' Goldman Sachs Says In Upgrade

ConocoPhillips 'Exhibiting Capital Discipline,' Goldman Sachs Says In Upgrade

ConocoPhillips (NYSE: COP) peaked last week after fourth-quarter earnings exceeded Street estimates. The strong performance was enough to get Goldman Sachs back on board with the stock. 

The Analyst 

Analyst Neil Mehta upgraded ConocoPhillips from Neutral to Buy and increased the price target from $76 to $82.

The Thesis

Mehta sees an attractive entry point given the stock’s recent pullback and promising opportunities for fundamental growth.

By his estimates, ConocoPhillips could benefit from improved long-term differentials internationally and a decline in operating costs.

“Among the U.S. majors, we believe ConocoPhillips is exemplary of a company exhibiting capital discipline,” the analyst said.

“Particularly as we see a weakening of the commodity price environment in 2019 ($63/bbl Brent) versus 2018 ($71/bbl), we view favorably companies that are able to maintain flat-to-lower budgets while maintaining a level of baseline growth.”

Goldman Sachs raised its cash-flow estimates for 2019 through 2022 by an average of 8 percent.

Mehta forecast improving returns on capital that could even exceed the rates of leaders like Exxon Mobil Corporation (NYSE: XOM). Additionally, the analyst anticipates higher oil volumes in Alaska, the continental U.S. and Asia.

“We believe long-term growth opportunities are underappreciated, including Alaska, Australia and Qatar." 

Price Action

ConocoPhillips shares were up 0.73 percent at $69.18 at the time of publication Monday. 

Related Links:

RBC Downgrades ConocoPhillips After Stock's Big 2018 Run

BMO Offers 11 Reasons To Like ConocoPhillips

Latest Ratings for COP

Mar 2019PiperJaffrayUpgradesNeutralOverweight
Mar 2019Morgan StanleyMaintainsOverweightOverweight
Feb 2019Goldman SachsUpgradesNeutralBuy

View More Analyst Ratings for COP
View the Latest Analyst Ratings

Posted-In: Goldman Sachs Neil MehtaAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


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