In an Oct. 8 research note, analyst Justin Jenkins reported that Raymond James raised its target price on Phillips 66 (PSX:NYSE) to $120 per share from $117 "on higher conviction in earnings quality/outlook." Currently, the energy company's share price is around $102.71.
Raymond James expects Q3/19 to be another strong quarter for Phillips 66 and as such, increased its earnings per share (EPS) forecast on the company to $2.55 from $2.30. Similarly, due to recent strength in refining margins, the investment bank boosted its Q4/19 EPS estimate to $2.03 from $1.78, which is above consensus' projected $1.97 EPS.
Jenkins described Phillips 66 as a "high-quality story." He noted it has "strong cash-generating assets that support growth in the higher-value Midstream and Chemicals segments to drive earnings power higher over time."
"Importantly, while the growth outlook remains solid, we also believe the strength of the refining assets that can be realized in the coming years remains under appreciated. With an excellent management team that has a keen focus on continued discipline in capital allocation and business optimization, we view PSX as a core holding," Jenkins stated.
Raymond James has an Outperform rating on Phillips 66.
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Disclosures from Raymond James, Phillips 66, October 8, 2019
ANALYST INFORMATION
Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.
The analyst Justin Jenkins, primarily responsible for the preparation of this research report, attest to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.
RAYMOND JAMES RELATIONSHIP DISCLOSURES
Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates, Inc. makes a market in the shares of Phillips 66.
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