ConocoPhillips’ (COP) “large and diverse asset base” offers flexibility in managing commodity price volatility, RBC Capital Markets said in a report emailed Wednesday.
The investment firm raised the company’s price target to $140 from $135 and maintained the outperform rating.
RBC recently added the company to its Global Top Energy list due to its “extensive, high-quality, and geographically diverse inventory that surpasses” rivals in exploration and production, according to the report.
ConocoPhillips’ “robust balance sheet grants a competitive edge in enhancing shareholder value throughout various commodity price cycles,” the report said.
ConocoPhillips may deliver free cash flow of $10.1 billion in 2024 and $10.7 billion in 2025 representing 7% and 8% yields, “which are slightly below large cap peers,” RBC said.
The company “does not hedge commodity prices, but its large diversity of production in terms of product and locations offers natural hedges” to counter price volatility, the report said.
ConocoPhillips reiterated a pledge to return at least $9 billion to shareholders this year, RBC said. “We view this as a baseline and anticipate potential increases in returns if commodity prices remain at the current range,” the report said.
ConocoPhillips shares rose 0.3% in recent trading Wednesday.