On Thursday, Citi reaffirmed its Buy rating on Phillips 66 (NYSE:) with a steady price target of $153.00. The firm’s analysis anticipates Phillips 66’s second-quarter earnings, which are scheduled to be reported on July 30, 2024. The updated financial model takes into account recent shifts in commodity prices, with the expectation that reduced diesel cracks will be balanced out by increased volumes during the quarter.
Phillips 66 is projected to post adjusted earnings per share (EPS) of $1.97 for the second quarter, as per Citi’s model. This figure is narrowly above the lower end of the recently revised consensus estimates, which range between $1.95 and $2.14 per share. Investors are advised to look for updates on the Rodeo Renewed project and progress in the company’s cost-saving measures in the upcoming quarterly report.
The energy company is on target to achieve the $14 billion midpoint of its capital return guidance by the end of 2024. However, Citi notes that surpassing the high end of the $15 billion capital return guidance seems improbable. This is attributed to the delayed cash proceeds from the sale of assets in the European Union, which are not expected until 2025, and the company’s net leverage currently exceeding its target.
Citi’s commentary underscores the importance of Phillips 66’s upcoming financial disclosures and strategic updates as indicators of the company’s performance and fiscal health. The firm’s maintained Buy rating reflects a continued positive outlook on the stock, despite the challenges outlined regarding capital returns and leverage.
In other recent news, Phillips 66 has been the subject of several significant financial adjustments and strategic moves. Mizuho, Wells Fargo and TD Cowen have all revised their price targets for the company, citing concerns over refining margins and a potential second-quarter earnings miss. Mizuho cut its target to $154, Wells Fargo to $180, and TD Cowen to $155. Both Mizuho and Wells Fargo maintained a Neutral rating, while TD Cowen retained a Buy rating.
In terms of strategic shifts, Phillips 66 recently completed the sale of its 25% stake in the Rockies Express Pipeline to Tallgrass Energy, LP for an enterprise value of $1.275 billion. This move aligns with the company’s commitment to a lower-carbon future. Additionally, the company has entered into a definitive agreement to acquire Pinnacle Midland Parent LLC from Energy Spectrum Capital for $550 million, a move expected to enhance its Midstream business.
InvestingPro Insights
As Phillips 66 (NYSE:PSX) approaches its second-quarter earnings report, a glance at real-time data from InvestingPro provides a broader context for investors. The company’s market capitalization stands at a robust $57.84 billion, reflecting its significant presence in the energy sector. A notable point for investors is the company’s price-to-earnings (P/E) ratio, which at 9.81 when adjusted for the last twelve months as of Q1 2024, suggests a potentially undervalued stock in comparison to industry averages. Additionally, the dividend yield as of mid-May is attractive at 3.43%, coupled with a solid dividend growth of 9.52% in the same period, highlighting a commitment to returning value to shareholders.
Investors may also consider the company’s revenue growth in the first quarter of 2024, which increased by 4.11% quarterly, providing a positive signal amidst a challenging -11.53% revenue contraction over the last twelve months. Furthermore, the InvestingPro platform offers more in-depth analysis with additional tips that could guide investment decisions. For instance, InvestingPro Tips suggest closely monitoring the company’s return on assets, which at 7.71% demonstrates effective use of assets to generate earnings. With these insights and more available on InvestingPro, interested parties can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, accessing an extensive list of 7 additional InvestingPro Tips that could further inform investment strategies.
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