Energy Business

Goldman Sachs Raises Oil Price Targets: 3 Mega-Cap Integrated Leaders to Buy Now


This is another large-cap company with a stock that offers strong value for investors. ConocoPhillips (NYSE: COP) explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas and natural gas liquids worldwide.

Conoco’s portfolio includes resource-rich North American tight oil and oil sands assets; lower-risk legacy assets in North America, Europe, Asia and Australia; various international developments; and an inventory of conventional and unconventional exploration prospects.

Many Wall Street analysts feel that Conoco can accelerate growth from a reloaded portfolio depth in the Bakken and Eagle Ford, with visibility on future growth from a sizable position in the Permian.

Goldman Sachs is very positive:

We see a 17% total return to our revised price target for ConocoPhillips. We see four key drivers of an attractive view on COP including (1) leverage to an oil price recovery, particularly given the stock’s recent dislocation versus Brent prices, to which it has historically been highly correlated, (2) robust free cash flow generation, representing attractive capital returns potential, (3) asset quality accretion via the recently completed Concho transaction, and (4) attractive valuation following underperformance versus peers. While we continue to get pushback around federal land exposure, we see positive catalyst opportunities via the company’s March guidance update, a potential buyback announcement, and an oil demand recovery.

Investors receive a 3.30% dividend. Goldman Sachs has a $58 price target, and the consensus target is $55.73. ConocoPhillips stock closed at $52.10 a share on Tuesday.

Exxon Mobil

The energy giant finally has been removed from the penalty box on Wall Street and offers investors an incredible entry point. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.

Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.

The analysts said this about the industry giant:

We see 15% total return to our revised price target for Exxon. Our positive view is predicated on leverage to positive macro tailwinds around higher oil prices and improving refining/chemicals margins, continued progress on cost reductions, as well as a commitment to capital discipline that we believe will drive lower break evens versus recent history. While Exxon has outperformed peers year-to-date, we continue to see potential positive catalysts in a positive consensus revision cycle as well as the company’s upcoming March analyst day..

The company pays investors a 6.32% dividend, which will probably continue to be defended. The $59 Goldman Sachs price target is well above the $46.66 consensus figure. Exxon Mobil stock closed most recently at $55.05.

All these stocks are solid ways to play a continued upswing in oil and an improving 2021 economy. Plus, with three integrated majors that are all stellar stocks for investors looking for a degree of safety and income and exposure to a sector that still has good upside potential, balanced growth and income investors still have very reasonable entry points.