Phillips 66 (NYSE: PSX) managed to beat earnings expectations, with growth ahead from refining and non-refining operations alike. Wells Fargo has an Outperform rating and said that it sees Phillips 66 remaining shareholder friendly after a dividend hike and buying back even more stock.
Wells Fargo raised its valuation range up to $99.00 to $104.00 from its prior $91.00 to $96.00 range, and that is based on only 12 times its 2017 earnings estimate. Phillips 66 closed up 3% at $89.07 on Friday. It has a 2.5% dividend yield and a 52-week range of $57.33 to $90.82 and a consensus price target of $95.33.
Wells Fargo’s report said:
Our valuation range is based on 12 times our 2017 earnings (per share) estimate. Systematic risks include reduced global GDP growth resulting in declines in refined product demand growth, excess/unjustified refining capacity supply growth, dramatic economic or regulatory edicts that depress U.S. oil-directed drilling and/or change U.S. fuel specifications. Company-specific risks include refinery utilization, unplanned downtime, international exposure, JV partner disagreements, and potential balance sheet missteps.
Phillips 66’s management team is focused on improving returns across the entire company, including growing high-return operations like Chemicals and Midstream while reducing the footprint of lower return operations and returning capital to shareholders. Importantly for investors, Phillips 66 offers multiple avenues for management to deliver value enhancements.
Suncor Energy Inc. (NYSE: SU) was raised to Outperform from Sector Perform at National Bank on Friday. This was after the Canadian oil sands giant beat earnings, and shares were higher on the week after the earnings report, despite a 68% drop in profits.
Apparently Suncor caught the eyes of the team at Motley Fool for upside as well, as it said this could be the start of a sustained rally higher and that investors should buy the stock. Suncor closed at $29.73, and it has a 52-week range of $24.20 to $36.35.
Weatherford International PLC (NYSE: WFT) was raised to Positive from Neutral at Susquehanna back on Tuesday, and the $12.00 price target compares to a $9.61 close ahead of the call. Weatherford actually managed to close up at $10.24 on Friday, and the Susquehanna price target is actually just below the $12.39 consensus price target.
Interestingly enough, Weatherford’s corporate credit rating was downgraded last week by Moody’s. Weatherford has a 52-week range of $7.21 to $17.27.
First Solar Inc. (NASDAQ: FSLR) may be far from an oil and gas stock, but it is the leader in production of photovoltaic cells and panels for solar power. Its shares were up almost 12% at $57.07 on Friday after Thursday’s strong earnings.
We tracked several positive analyst calls in First Solar: Merrill Lynch has only a Neutral rating, but it raised its price objective to $61 from $58 in its call. The highest analyst target is $81.00, but Cowen (Outperform) raised its price target to $75 from $65, and Standpoint (Buy) raised its price target to $72 from $60. Another big analyst report was from Janney Capital Markets. The firm reiterated its Buy rating and raised its fair value objective on Friday. Its report on First Solar said:
First Solar’ third quarter preliminary results were strong. Earnings per share of $3.38 was well above our $1.51 forecast (consensus was $1.50) as recognition of revenue from the Desert Stateline project, cost improvements, and decreased module recycling/collection obligations all benefited profit margins. Quarterly results aside, the company raised full year 2015 guidance, and we’ve adjusted our estimates to reflect positive third quarter performance. We maintain our BUY rating and raise our Fair Value from $77 to $79.