UBS Cuts Price Target as ConocoPhillips (COP) Cuts Dividends and Guidance
UBS maintained a Neutral rating on ConocoPhillips (NYSE: COP), and cut the price target to $38.00 (from $42.00), following the company's 4Q earnings report. COP cut its quarterly dividend from $0.74/sh to $0.25/sh, implying a dividend yield of ~2.8% (vs. ~7.9% prior). COP also further reduced its 2016 capex budget from $7.7bn to $6.4bn, and operating cost guidance from $7.7bn to $7bn.
Analyst William Featherston commented, "COP cut its quarterly dividend from $0.74/sh to $0.25/sh, implying a dividend yield of ~2.8% (vs. ~7.9% prior). While dividend is still a high priority, COP's strategy has shifted from offering a compelling dividend to a competitive dividend enabling it to preserve balance sheet strength and provide financial flexibility through the current down cycle. COP's dividend cut repositioned itself more in line with E&P peers on EV/DACF, dividend yield & dividend as a % of discretionary cash flow. Notably, it materially lags CVX on prod'n growth & dividend yield while trading at a ~2x premium."
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Shares of ConocoPhillips closed at $35.32 yesterday.