Phillips 66 Faces Challenges Despite Strong Market Presence
Houston’s Phillips 66 (PSX) is a major player in the energy sector, with a market capitalization of $51.2 billion. The company specializes in a range of operations including chemicals, midstream services, renewable fuels, and refining, showcasing its diverse energy manufacturing and logistics capabilities.
Powerful Yet Troubled
As a large-cap stock, PSX holds considerable weight in the oil and gas refining and marketing sector. Its size and influence are bolstered by a commitment to excellence and environmental initiatives aimed at boosting energy efficiency. The company’s dedication to producing high-quality petrochemical products has positioned it as a leader in its field.
Stock Performance Sinks
Recently, however, PSX’s stock has struggled, dropping 28.8% from its 52-week peak of $174.08, reached on April 16. Over the past three months, shares have decreased by 1.4%, contrasting sharply with the Dow Jones Industrials Average’s 6.9% rise.
Year-to-Date Declines
Looking at the year-to-date (YTD) performance, PSX shares have dipped by 7%. Comparatively, the Dow Jones index saw gains of 16.5% and 20.1% over the previous year. The stock has been trading below its 200-day moving average since early August and hovered under its 50-day average since late April, indicating a persistent bearish trend.
Challenges Ahead
The downturn in PSX’s performance is largely due to volatile commodity prices and rising depreciation charges, with an increase of $230 million expected each quarter until its Los Angeles refinery shutdown at the end of 2025. On October 29, PSX shares fell over 4% following the release of disappointing Q3 results, where earnings dropped sharply. Adjusted earnings per share fell from $4.63 a year prior to $2.04. Refining margins took a hit as well, falling to $8.31 per barrel from $19.06, resulting in a $67 million pre-tax loss in the Refining segment. Concerns were raised further due to weaker cash flow and higher-than-anticipated losses in the Renewable Fuels part of the business.
Industry Landscape
In a competitive market, Valero Energy Corporation (VLO) has outperformed PSX, exhibiting only a minor YTD loss and a robust 7.3% gain over the last 52 weeks.
Analysts Remain Optimistic
Despite the challenges, Wall Street analysts maintain a moderate level of optimism about PSX. The stock carries a consensus rating of “Moderate Buy” from 19 analysts, with a mean price target of $145, indicating a potential upside of 16.9% from its current position.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more details, view the Barchart Disclosure Policy here.
The views and opinions expressed herein are solely those of the author and do not necessarily reflect those of Nasdaq, Inc.
