Raymond James Upgrades ConocoPhillips (COP) to Strong Buy
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Raymond James analyst Pavel Molchanov upgraded ConocoPhillips (NYSE: COP) from Outperform to Strong Buy with a price target of $85.00 (from $80.00).
The analyst commented, "Despite ~$1B in one-time costs associated with the Concho acquisition, Conoco generated nearly $1B in FCF during the first quarter alone. Now that those costs are behind them, we have Conoco delivering roughly $2B worth of FCF every single quarter for the next two years at strip prices. By itself, the organic FCF works out to a healthy 8%/10% FCF/EV yield in 2021/2022 (impressive for a company of their size), but it is also being supplemented by proceeds from the announced sale of their CVE stake (~$1.6B value with more details below). Adding to all this, COP has a commitment to return at least 30% of all operating cash flow to shareholders (averaging 43% since 2016), an already strong balance sheet (plans to strengthen it by $5B over 5-years) and maximum exposure to our bullish commodity outlook (FCF yield of nearly 16% in 2022 under RJ commodity forecast). As such, we are upgrading COP to Strong Buy rating and raising our target price to $85/share."
Shares of ConocoPhillips closed at $55.70 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Hot Upgrades, Upgrades
Related EntitiesRaymond James, Pavel Molchanov, Definitive Agreement
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