Analyst bullish on ConocoPhillips on synergy potential

Investing.com -- Analysts are bullish on ConocoPhillips (NYSE:COP ) as Morgan Stanley (NYSE:MS ) resumes coverage with “overweight”, while Mizohu upgrades to “outperform” given its underperformance since announcing its Marathon acquisition.

Mizuho (NYSE:MFG ) boosted its synergy target for the deal to $1 billion annually, double its initial estimate, while its 2025 capital plan of under $13 billion supports robust free cash flow generation.

Trading at a discount to large-cap peers on enterprise value-to-EBITDA metrics, ConocoPhillips offers higher free cash flow yields despite ongoing investments

“We believe COP’s expanding LNG footprint and advantaged commercial marketing business leave it favorably positioned to benefit from growing global LNG demand and international pricing,” Mizuho analyst wrote.

While Morgan Stanley resumed it coverage the stock with a price target of $128. Its rating was underpinned by attractive cash flow growth from major projects, strong capital efficiency, and its Alaskan disclosed reserves between the Willow and Narwhal developments.

“Under the incoming Trump administration, a more constructive permitting environment could create an opportunity for COP to appraise and develop additional prospects in the region,” said analyst on Alaska upside.

The company has a disciplined investment and consistent return of cash coupled with a high quality, diversified, low-cost portfolio, which Mizuho noted supports a differentiated combination of free cash and growth.

Source: Investing.com