ConocoPhillips (COP) stock experienced a slight dip on Thursday despite reporting mixed third-quarter earnings results. While the company surpassed earnings estimates, posting an adjusted EPS of $1.78, it fell short on revenue, registering $13.6 billion against an expected $14 billion. However, the company’s positive developments, including a 34% hike in its quarterly dividend to $0.78 per share and an upward revision in its production outlook for FY24, have fueled optimism among analysts.
Truist Securities analyst Neal Dingmann anticipates a substantial increase in ConocoPhillips’ pro forma free cash flow (FCF) driven by strong organic performance and additional cash flow generated from the recent acquisition of Marathon Oil. Dingmann reiterates his Buy rating and maintains a $138 price target for COP shares. He believes that with stable oil prices, ConocoPhillips could potentially repurchase nearly all the shares issued during the Marathon Oil acquisition within 6-7 quarters. This optimistic outlook is underpinned by ConocoPhillips’ robust balance sheet and the assumption of a consistent dividend payout while de-prioritizing debt repayment.
Dingmann emphasizes that ConocoPhillips’ FCF is expected to benefit from its well-diversified portfolio, encompassing Lower 48 operations, LNG projects, and Alaskan activities. He has revised his EBITDAX estimates upwards to $24.988 billion for 2024 and $33.208 billion for 2025, surpassing the consensus estimates of $24.443 billion and $27.939 billion, respectively.
Scotiabank analyst Paul Y. Cheng shares a similarly positive outlook, stating that ConocoPhillips’ third-quarter 2024 results are likely to have a positive impact on its near-term share price performance. Cheng maintains a Sector Perform rating and a $115 price target for COP. He forecasts an adjusted EPS of $7.40 and EBITDA of $22.912 billion for 2024.
For investors seeking exposure to COP shares, two exchange-traded funds (ETFs) provide convenient options: Texas Capital Funds Trust Texas Capital Texas Oil Index ETF (OILT) and IShares U.S. Oil & Gas Exploration & Production ETF (IEO).
Despite the positive analyst sentiment and recent developments, COP shares closed down 1.66% at $107.71 on Thursday. Investors will be watching closely to see how ConocoPhillips navigates the evolving energy landscape and whether its strong financial performance can translate into sustained share price growth.
