Phillips 66 Faces Challenges Amid Market Volatility and Mixed Earnings

Phillips 66 (PSX), based in Houston, Texas, is a major player in the energy sector, recognized for its diversified operations in manufacturing and logistics. The company runs through various segments, including Midstream, Chemicals, Refining, and Marketing & Specialties. With a market capitalization of $51.4 billion, Phillips 66 operates in multiple countries across the Americas, Europe, and beyond.

Large-Cap Profile in Turbulent Times

Stocks with market values exceeding $10 billion are categorized as “large-cap stocks,” and PSX certainly fits this definition. The company’s extensive operations justify its valuation above this threshold. However, despite the strengths in its diverse sectors, Phillips 66 has seen its stock price decline significantly.

Recent Performance Trends

Phillips 66 has dropped 27.5% from its all-time high of $174.08 reached on April 5. Over the last three months, PSX has experienced a 1.9% decrease, although it has outperformed the Energy Select Sector SPDR Fund (XLE), which declined by 3.9% during the same period.

Looking at the long-term horizon, Phillips 66’s stock performance tells a disappointing story. It has plummeted 15.4% over the past year and managed only a modest decline of 1.5% in the past six months. This is significantly less than XLE’s decrease of 49 basis points within the year and its 1.7% gains over the last six months. Furthermore, PSX has consistently traded below its 200-day moving average since early August 2024.

Mixed Earnings Report and Future Outlook

On January 31, after announcing mixed fourth-quarter results, Phillips 66’s stock dropped by 2.5%. The company’s revenue fell by 12.3% year-over-year to approximately $34 billion, although it exceeded analysts’ expectations by 6.1%. This decline was mainly due to thinner crack spreads, which compressed margins throughout the industry. Additionally, the company’s earnings faced pressure from accelerated depreciation connected to the shutdown of its Los Angeles Refinery.

On a brighter note, Phillips 66 improved its refining metrics during this quarter due to above-industry-average crude utilization. This achievement helped the company reduce its costs by $1 per barrel. Nonetheless, adjusted earnings presented a challenging picture, declining to a loss of $61 million from the previous year’s profit of $1.4 billion.

In comparative performance, Phillips 66 has outperformed Marathon Petroleum Corporation (MPC), which reported a 23.1% decline over the last year and a 17.1% dip over the past six months.

Analyst Sentiment and Price Targets

Among the 19 analysts tracking PSX, the overall consensus rating is categorized as a “Moderate Buy.” The average price target stands at $141.37, suggesting a potential upside of 12% from current trading levels.

On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All data and information included are for informational purposes only. Please review the Barchart Disclosure Policy here.

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The views and opinions expressed herein are the author’s and do not necessarily reflect those of Nasdaq, Inc.