Wall Street's Outlook on ConocoPhillips Shares: Bullish or Bearish Expectations?
ConocoPhillips' Struggles in a Changing Market
Houston, Texas-based ConocoPhillips (COP) finds itself in a rough patch, underperforming the broader market and its own industry over the past year. With a market cap of a hefty $110.8 billion, the oil and gas titan employs nearly 11,800 folks across 13 countries spanning the Americas, Indo-Pacific, and EMEA region.
COP's stock prices have taken a plunge, diving 29.1% over the past 52 weeks – about twice as much as the S&P 500 Index's modest 8.2% gains over the same period. An 11.6% drop for COP so far in 2025, while the S&P 500 saw a minor 4.7% decline, shows that COP's slide isn't confined to 2021.
Narrowing the focus, COP's performance lags the industry-focused iShares U.S. Oil & Gas Exploration & Production ETF too, which has declined 21.4% over the past 52 weeks and 8.3% on a YTD basis.
Post the release of its Q4 results on Feb. 6, COP witnessed a marginal stock decline. Despite producing 281 MBOED more than the previous year's quarter, climbing to 2,183 MBOED, COP's overall revenue decreased 3.7% YoY to $14.7 billion due to falling oil prices. Consequently, adjusted net income took a hit, plummeting 16% YoY to $2.4 billion.
However, the company's revenue managed to surpass the Street's expectations by 41 basis points, and its adjusted EPS of $1.98 beat analyst expectations by 4.2%, helping to cushion the stock price drop.
For the 2025 fiscal year ending in December, analysts predict COP to report a 15% decline in adjusted earnings to $6.62 per share, compared to the previous year. It's a bumpy road ahead, as the company has a mixed earnings surprise history, with three beats and one miss over the past four quarters.
Despite the recent stock underperformance, COP has been repositioning itself as a leaner, cost-effective oil producer by offloading assets and acquiring Marathon Oil for $22.5 billion. Boosting its reserves to over 20 billion barrels at an average supply cost of $32 per barrel, COP boasts a competitive edge in the current energy landscape. Projecting robust cash flow generation of $12.9 billion for its 2025 capital investment plan, COP is betting on maintaining and expanding its output amid global economic uncertainties.
While analyst sentiment places COP's outlook as cautiously optimistic, the company hasn't quite breezed through post-earnings announcements. Post-earnings announcements, COP's shares tend to recede, falling about 58% of the time. But, recent analyst estimators have seen positive revisions, suggesting a possible beat on earnings for Q1. This positive rebound grows stronger, supported by an Earnings ESP indicator and whisper numbers.
As it stands, the market's analyst price targets have cooled down slightly, though most analysts remain bullish, with many assigning "Buy" or "Outperform" ratings. Betty Jiang of Barclays, for instance, maintains a "Buy" rating while trimming her price target from $135 to $120. Current market estimates suggest a 33.6% premium to current price levels, with the Street-high target hinting at a whopping 59.8% upside potential.
In short:
- COP has been struggling against the S&P 500 and its sector benchmarks for nearly a year now.
- Analysts forecast an 15% decline in COP's adjusted earnings for the 2025 fiscal year.
- Q1 2025 earnings might experience a modest dip or even beat the estimates, but odds aren't favorable.
- COP's strategic moves and cost-efficient production profile demonstrates resilience amid the current stock price slump.
- Although the market's analysts' rate the stock cautiously optimistic, their revised price targets lean slightly cooler compared to earlier. Behind that cooler stance hides a bullish spirit of revolutionary change!
- ConocoPhillips (COP) has underperformed the wider market, including the S&P 500 Index and its industry peers, for nearly a year.
- Analysts predict a 15% decline in ConocoPhillips' adjusted earnings for the 2025 fiscal year, compared to the previous year.
- The Q1 2025 earnings may see a minimal dip or possibly surpass estimates, but the odds aren't favorable.
- Despite the stock's recent underperformance, ConocoPhillips' strategic moves, such as asset offloading and the acquisition of Marathon Oil, aim to position the company as a cost-effective oil producer, with a competitive edge in the current energy landscape.
