Piper Sandler has maintained its Overweight rating on shares of ConocoPhillips (NYSE: NYSE:COP), with a steady price target of $135.00.
The firm made adjustments to its estimates for the oil and gas company, noting several factors that influenced the revision.
The changes come as the firm takes into account recent commodity pricing and operational adjustments. Piper Sandler expects ConocoPhillips to perform within the company's guidance ranges, though it has revised its estimates to reflect current market conditions.
The revisions include accounting for the end-of-quarter commodity pricing, persistent weakness in natural gas prices, and lower production volumes in Libya due to disruptions in September.
As a result, the firm has modified its third-quarter earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates for ConocoPhillips. The new estimates stand at $1.61 per share for EPS and $5,497 million for EBITDA, compared to the previous estimates of $1.96 per share for EPS and $5,991 million for EBITDA.
Despite these adjustments, Piper Sandler remains positive on the exploration and production (E&P) sector over refining. The firm highlighted the increased volatility and uncertainty in crude markets looking ahead into 2025, but still sees more potential in E&P. ConocoPhillips, with its above-average crude leverage, is considered relatively attractive among large-cap E&P companies.
In other recent news, Mizuho has maintained its neutral stance on ConocoPhillips, adjusting its earnings per share estimate to $1.62 due to factors such as a dip in oil prices and higher operating costs. Simultaneously, JPMorgan (NYSE:JPM) has resumed coverage on ConocoPhillips, highlighting its strong portfolio and commitment to shareholder returns, with a price target of $126.00. The company is expected to return $9 billion to shareholders in 2024, potentially increasing to $11 billion following a merger with Marathon Oil Corporation (NYSE:MRO).
The merger with Marathon Oil Corporation has also received shareholder approval and is pending regulatory approval and customary closing conditions. The Public Utility Commission of Texas has approved the Permian Basin Reliability Plan, aimed at enhancing power grid infrastructure due to increased demand from the oil and gas sector, a development that will support ConocoPhillips' operations in the region.
Furthermore, ConocoPhillips, along with other major U.S. energy companies, has disclosed payments exceeding $42 billion to foreign governments under a new Securities and Exchange Commission regulation. Lastly, Nelda J. Connors has been appointed to the ConocoPhillips board of directors, a move expected to enhance the company's strategic objectives.
InvestingPro Insights
To complement Piper Sandler's analysis, recent data from InvestingPro offers additional context on ConocoPhillips' financial position. The company's market capitalization stands at $129.9 billion, with a P/E ratio of 12.42, indicating a relatively modest valuation compared to earnings. This aligns with the firm's Overweight rating and suggests potential upside, especially considering the InvestingPro fair value estimate of $117.1 and analyst fair value target of $135.
InvestingPro Tips highlight ConocoPhillips' strengths in the current market environment. The company has maintained dividend payments for 54 consecutive years, demonstrating a commitment to shareholder returns even in volatile commodity markets. Additionally, ConocoPhillips operates with a moderate level of debt, which could provide flexibility in navigating the uncertain crude markets mentioned by Piper Sandler.
While Piper Sandler revised its estimates downward, it's worth noting that ConocoPhillips remains profitable, with a strong return over the last five years according to InvestingPro Tips. This historical performance, combined with the company's position as a prominent player in the Oil, Gas & Consumable Fuels industry, supports the positive outlook for the E&P sector expressed in the analysis.
For investors seeking a deeper understanding of ConocoPhillips' potential, InvestingPro offers 5 additional tips not mentioned here, providing further insights into the company's financial health and market position.
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