TD Cowen starts on ConocoPhillips with 'buy' rating on growth drivers

Investing.com -- TD Cowen initiated coverage of ConocoPhillips (NYSE: COP) with a "Buy" rating and a $125 price target, noting its vast asset base, low-cost operations, and long-term growth drivers, including the Willow Project and LNG initiatives.

ConocoPhillips' extensive inventory, spanning over 20 years, and its acquisition of Marathon Oil (NYSE: MRO) assets position the company for sustained capital efficiency. Synergies from the deal are expected to exceed $1 billion, with a breakeven of $32 per barrel WTI, the lowest among large-cap peers.

The company plans to return $11 billion to shareholders in 2025, including $7 billion in buybacks and a 3% fixed dividend, offering a total yield of over 8%.

Production is forecast to grow at a 6% compound annual rate through 2030, driven by a doubling of Alaska volumes from Willow and significant LNG contributions from Port Arthur and Qatar projects.

“COP's unique scale, inventory depth and synergy targets following the MRO close, set the stage for ongoing sustainable improvements in capital efficiency while long lead assets such as the Willow Project and Port Arthur/Qatar LNG allow for long-term growth at an attractive valuation of 7% FCF yield,” analyst said.

Shares, which have underperformed the XOP index over the past year, are expected to rebound with focus on ConocoPhillips’ visible growth trajectory and industry-leading returns.

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