ConocoPhillips Faces Tough Year but Future Looks Brighter

ConocoPhillips (COP), based in Houston, Texas, stands as one of the largest independent exploration and production companies globally, boasting a market capitalization of $113.3 billion. The company specializes in the responsible extraction and development of crude oil, natural gas, and natural gas liquids (NGLs), focusing entirely on the upstream segment of the energy sector.

Recent Performance Lags Behind Market Gains

Over the past year, COP shares have lagged the broader market, declining 9.1% in the last 52 weeks while showing a modest increase of 1.4% in 2025. In contrast, the S&P 500 Index ($SPX) enjoyed a substantial gain of 21.8% over the same period, along with a 2.7% rise this year.

Comparison with Industry Peers

When comparing to the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), ConocoPhillips also fell short, underperforming its 4.9% increase over the last year. However, COP is showing signs of improvement with a 3.6% gain year-to-date.

Shifting Strategies for a Stronger 2025

Despite recent struggles, ConocoPhillips made a strategic move by acquiring Marathon Oil in late November, which has positioned it for potential growth in 2025.

Following the release of its Q3 earnings on October 31, shares of COP rose by 6.4%. The report indicated revenue dropping to $13.6 billion from $14.9 billion the previous year, with earnings lowering to $2.1 billion ($1.76 per share) from $2.8 billion ($2.32 per share). This downturn was largely attributed to a 10% decrease in average realized prices, driven by sharply declining natural gas prices in the lower 48 states, where nearly half of the company’s production occurs. Looking ahead, ConocoPhillips has raised its production guidance for Q4 to between 1.99 million and 2.03 million barrels of oil equivalent per day.

Future Earnings Outlook and Analyst Ratings

For the fiscal year 2024, which ends in December, analysts anticipate a 12.9% drop in adjusted EPS, projecting it to be $7.64. ConocoPhillips’ earnings history has been mixed; it has outperformed Wall Street estimates in two of the past four quarters while missing in two others.

Currently, COP stock holds an overall consensus rating of “Strong Buy.” Out of 28 analysts, 23 recommend a “Strong Buy,” two favor a “Moderate Buy,” and three suggest “Hold.”

Analysts Boost Price Targets

This outlook is slightly more optimistic compared to a month ago when there were 22 “Strong Buy” ratings. Analyst John Freeman from Raymond James Financial, Inc. raised ConocoPhillips’ price target to $157 from $148 while maintaining a “Strong Buy” rating. He indicated that despite the underwhelming performance in the fourth quarter, the company is well-positioned within the Exploration and Production sector as the new year begins.

The average price target of $132.69 suggests a potential upside of 31.9%, while the highest target of $165 indicates a promising 64% premium over current price levels.

On the date of publication, Kritika Sarmah did not hold any positions in the securities mentioned in this article. All information is intended for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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