UPDATE: Goldman Sachs Reinstates ConocoPhillips (COP) at Buy
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Goldman Sachs analyst Neil Mehta reinstates coverage on ConocoPhillips (NYSE: COP) with a Buy rating and a price target of $52.00.
The analyst comments "We are constructive on the free cash flow power of the combined business and see compelling valuation at current levels after COP shares have underperformed peers over the last year. We are positive on COP given: (1) leverage to an oil price recovery, with a $60-$65/b Brent view for the next several years, (2) the asset quality accretion that Concho delivers to the Conoco portfolio, (3) robust free cash flow generation over the next five years, (4) sustained dividend growth and potential for incremental returns through buybacks/special dividends, (5) improving returns on capital and (6) discounted valuation, with 31% total return to our 12-month, $52 price target. The key sources of pushback we anticipate on our view are Conoco’s federal land exposure in New Mexico and Alaska, if our above consensus oil view does not play out, and if the company raises capital spending in pursuit of growth over free cash flow."
Shares of ConocoPhillips closed at $40.97 yesterday.
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