CFRA Lifts View On Shares Of Conocophillips To Hold From Sell

We raise our 12-month target price by $21 to $125, a 6.0x multiple of enterprise value to projected 2024 EBITDA, slightly above COP’s long-term historical forward average. Our update is based on our current view that crude oil prices should hold up well in 2024 and could approach the 2022 average (WTI averaged $95/barrel). We lift our 2023 EPS estimate by $0.20 to $8.81 and 2024’s by $0.47 to $10.37. COP’s short-cycle business in the U.S. Lower 48 should benefit from strength in crude prices and a bit of service cost weakness. For longer-term projects like Willow in Alaska, while there remains the prospect for cost overruns (like with many ambitious projects), we think upside potential is there, albeit in the long run. We think the industry is in the early days of a lengthy upcycle given a long period of insufficient spending on new supply, and that should buttress crude oil prices through the end of this decade. Shares yield 3.8%.

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