TD Cowen Upgrades Phillips 66 (PSX) to Outperform, 'Refining Operational Improvement Key to Thesis'

TD Cowen analyst Jason Gabelman upgraded Phillips 66 (NYSE: PSX) from Market Perform to Outperform with a price target of $123.00 (from $110.00).

The analyst comments "Refining opex worsened from near best in class pre-Covid to bottom tier in 2022, from $0.90/bbl better than peer-average to $0.90/bbl worse. We estimate ~$0.50/bbl of this was due to higher turnaround costs, with additional impacts likely due to unplanned shutdowns. As a case in point, utilization moved from 4% better than industry average, or 95%, in 2016-2019 to 1% worse. Additionally, 2022 refining EBITDA was $3/bbl weaker normal vs. peers. Nevertheless, PSX at its '22 Analyst Day laid out a renewed focus on the segment. It guided $0.75/bbl opex improvement, nearly half the portion that is not explained by higher turnaround spend. We incorporate improvements in our mid-cycle, '25 estimates including $7/bbl opex and 93% utilization. Ops improvements should start to be apparent from 2Q with lower turnarounds than the past year."

For an analyst ratings summary and ratings history on Phillips 66 click here. For more ratings news on Phillips 66 click here.

Shares of Phillips 66 closed at $91.61 yesterday.

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