The firm said it raised its rating on the energy manufacturing and logistics company based on its belief that the weakness in oil creates an entry point, as the lower prices will not affect long term forecasts, or management's ability to build a larger and higher multiple business over the next few years.
"Phillips 66 higher multiple growth strategy is underpinned by investment in growth assets...we believe Phillips 66 asset footprint will allow the capture of other opportunities over time," Credit Suisse said.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
Credit Suisse has a $95 price target on Phillips 66 stock.
Separately, TheStreet Ratings team rates PHILLIPS 66 as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate PHILLIPS 66 (PSX) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and poor profit margins."
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 120.6% when compared to the same quarter one year prior, rising from $535.00 million to $1,180.00 million.
- PSX's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.86 is somewhat weak and could be cause for future problems.
- The gross profit margin for PHILLIPS 66 is currently extremely low, coming in at 5.01%. Regardless of PSX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.22% trails the industry average.
- Net operating cash flow has significantly decreased to $429.00 million or 77.98% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- You can view the full analysis from the report here: PSX Ratings Report