Key Stats for Phillips 66 Stock
- This-Week Performance: 11%
- 52-Week Range: $91 to $159
- Valuation Model Target Price: $185
- Implied Upside: 17%
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What Happened?
Phillips 66 stock rose about 11% this week, ending near $158 per share, as investors reacted to earnings follow-through and renewed confidence in the company’s cash flow durability. Shares moved higher as refining sentiment improved broadly, with Phillips 66 standing out after delivering stronger-than-expected profitability and reinforcing its multi-year efficiency strategy.
The rally was driven by the company’s Q4 2025 earnings release this week, which showed $2.9 billion in reported earnings, or $7.17 per share, alongside $2.8 billion in operating cash flow.
Management emphasized operational execution, with CEO Mark Lashier noting that “2025 was a pivotal year for Phillips 66” as the company began seeing the benefits of cost reductions and portfolio actions.
Results highlighted record clean product yields in refining and another quarter of record NGL transportation and fractionation volumes in Midstream, reinforcing confidence in margin durability even as refining conditions normalize.
Those operational gains helped validate the earnings rebound and supported continued buying interest through the week.
Analyst actions added to the momentum. Wells Fargo raised its price target to $163 and reiterated an Overweight rating, citing improved earnings visibility and capital return capacity, while Morgan Stanley lifted its target to $147 from $140 and maintained an Equal Weight rating.
Institutional activity showed selective repositioning rather than broad selling, with Savant Capital increasing its stake by 33.3% and Jones Financial raising holdings by 19.8%, offsetting trims from other firms.
An insider sale by EVP Vanessa Allen Sutherland, who sold 4,394 shares at about $150 for roughly $659,100, did little to derail sentiment, with institutional investors still holding about 76.9% of the stock.
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Is Phillips 66 Undervalued?
Under valuation assumptions, the stock is modeled using:
- Revenue Growth (CAGR): 2.8
- Operating Margins: 5.2%
- Exit P/E Multiple: 13x
Phillips 66’s valuation reflects a business operating in a more normalized refining environment rather than one facing structural demand pressure, with modest revenue growth assumptions tied to steady fuel consumption and disciplined capacity management.
What matters more for future returns is margin durability rather than top-line acceleration. Higher refinery utilization, record clean product yields, wider exposure to advantaged heavy crude differentials through the WRB acquisition, and incremental contributions from Midstream and marketing assets support earnings even if revenue growth remains muted.
Midstream provides an additional stability and growth lever, with adjusted EBITDA up 40% since 2022, about $1 billion delivered in Q4 2025, and a clear path toward roughly $4.5 billion in run-rate adjusted EBITDA by year-end 2027 as gas plants, NGL expansions, and pipeline projects ramp.
Based on these inputs, the valuation implies a target price of $185, representing about 17% total upside over roughly three years, indicating the stock appears undervalued at current levels.
Over the next year, results hinge on refining throughput, crack spread capture, progress toward lowering controllable refining costs toward about $5.50 per barrel, and continued Midstream execution, while dividends and buybacks funded by free cash flow continue to lift per-share earnings growth.
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