Phillips 66 (PSX – Research Report), the Energy sector company, was revisited by a Wall Street analyst today. Analyst Jason Gabelman from TD Cowen maintained a Buy rating on the stock and has a $132.00 price target.
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Jason Gabelman has given his Buy rating due to a combination of factors involving Phillips 66’s potential for value enhancement. The activist investor Elliott has outlined several strategic changes that could unlock significant value for the company. These proposed changes include spinning off or selling its Midstream and chemical operations, which could improve the company’s overall financial performance and market valuation. Although Phillips 66’s refining segment has been underperforming compared to its peers, these restructuring steps, if executed, could help bridge the performance gap and address market undervaluation.
Moreover, despite some uncertainties regarding the implementation of these proposals, the potential upside from such strategic moves appears to be significant. The Midstream spin-off, in particular, offers the easiest execution path with prospects for valuation improvements, albeit with some risks. Thus, Jason Gabelman believes that, with the right management decisions and market conditions, Phillips 66 has the potential to realize substantial value gains, which justifies the Buy rating.
Gabelman covers the Energy sector, focusing on stocks such as Exxon Mobil, Phillips 66, and Cheniere Energy. According to TipRanks, Gabelman has an average return of 6.6% and a 49.37% success rate on recommended stocks.