The analyst firm raised its price target for ConocoPhillips to $85 from $80. Analyst Fadel Gheit said the increase reflects the company's improving outlook on stronger financial and operating results.
"COP at last week's analyst day reiterated its value proposition of 3-5% CAGR for both production and margins, by allocating 95% of its $16B annual CAPEX in 2014-17 on projects with >$30/boe margin, while maintaining a dividend yield above its US peers and strong financial flexibility," Gheit wrote. "COP is trading at lower P/E and P/CF multiples relative to its E&P peers and at a significant discount on implied reserve value (IRV). With higher production growth than the majors and higher dividend yield and ROACE and a lower valuation than E&P peers, COP offers an alternative to both groups."
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Separately, TheStreet Ratings team rates CONOCOPHILLIPS as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONOCOPHILLIPS (COP) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 74.4% when compared to the same quarter one year prior, rising from $1,426.00 million to $2,487.00 million.
- 38.26% is the gross profit margin for CONOCOPHILLIPS which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.76% significantly outperformed against the industry average.
- Net operating cash flow has slightly increased to $3,911.00 million or 1.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.28%.
- The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
- You can view the full analysis from the report here: COP Ratings Report