On Thursday, UBS reiterated its Buy rating on shares of ConocoPhillips (NYSE:COP), maintaining a price target of $166.00. The firm's positive stance follows ConocoPhillips' recent acquisition of Marathon Oil Resources (NYSE:MRO) and subsequent discussions with the sell-side.
UBS views the transaction favorably, citing its accretive nature to financial metrics, the expansion of the company's asset base in the Lower48, and the identification of clear synergies with potential for further upside.
The acquisition is also seen as supportive of ConocoPhillips' recent 34% increase in its base dividend. UBS notes that this deal does not alter ConocoPhillips' unique blend of unconventional and long-cycle development projects, which provide greater visibility compared to its industry peers.
The firm's updated estimates are based on the assumption that the transaction will close by the end of 2024. Despite the unexpected nature of the acquisition, UBS believes it presents an opportunistic move for ConocoPhillips and has chosen to maintain its stock price target of $166.00.
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