Key Stats for ConocoPhillips Stock
- 1- Year Price Change for ConocoPhillips stock: -7%
- $COP Share Price as of Jan. 16: $98
- 52-Week High: $106
- $COP Stock Price Target: $112
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What Happened?
ConocoPhillips (COP) stock fell nearly 1% on Friday after Bank of America downgraded the company to “underperform” from “neutral”.
Analyst Kalei Akamine said the stock faces headwinds from its high breakeven price and uncompetitive cash flow yield compared to other oil and gas producers.
The core issue is simple:
- ConocoPhillips needs oil prices around $53 per barrel to break even, which is much higher than many of its peers.
- That’s a problem when West Texas Intermediate crude is trading around $57.
- The company’s debt-adjusted free cash flow yield sits at just 4.4%, which Akamine called uncompetitive.
The analyst pointed to the company’s long-cycle capital projects as a major drag.
- ConocoPhillips is spending billions on the Port Arthur LNG and Willow oil projects in Alaska, but they won’t start producing for another 2 to 4 years.
- CEO Ryan Lance acknowledged on the company’s recent earnings call that Willow’s total project cost has risen to $8.5 billion to $9 billion, up from the original $7 billion to $7.5 billion estimate.
“At our forecast of $57 WTI, we do not believe COP can sustain its recent pace of returning 45% of cash flow,” Akamine wrote.
ConocoPhillips stock has struggled this year as investors question whether the company can maintain its aggressive capital return program while funding major projects.
The company returned about $7 billion to shareholders through the third quarter, including $1.3 billion in buybacks and $1 billion in dividends.
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What the Market Is Telling Us About COP Stock
The downgrade suggests investors are getting pickier about which energy stocks to own in a volatile oil market. ConocoPhillips stock is being penalized for its high capital intensity and multi-year wait for major projects to come online.
The company is betting big on its future. CFO Andy O’Brien said on the earnings call that ConocoPhillips expects a $7 billion free cash flow inflection by 2029, driven by Willow, Port Arthur LNG, and two Qatar LNG projects. That would roughly double the company’s 2025 free cash flow.
But that’s still years away. In the meantime, ConocoPhillips stock faces pressure from elevated spending.
The company guided 2026 capital expenditures to about $12 billion, down from $12.5 billion this year, but operating costs will also drop to $10.2 billion from $10.6 billion.
For now, the market seems to prefer oil producers with lower breakeven prices and faster capital payback.
ConocoPhillips stock will likely stay under pressure until investors see clearer evidence that Willow and Port Arthur will deliver the promised cash flow growth.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
