Morgan Stanley analyst Joe Laetsch maintained a Hold rating on Phillips 66 (PSX – Research Report) today and set a price target of $140.00.
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Joe Laetsch has given his Hold rating due to a combination of factors affecting Phillips 66’s financial performance. Despite a significant increase in benchmark cracks, the refining segment is expected to face challenges due to elevated maintenance activities, which are likely to impact utilization rates and capture rates negatively. Additionally, higher natural gas prices are anticipated to increase operating costs, contributing to a projected loss in the refining segment.
In the Midstream segment, earnings are expected to decline due to reduced volumes and weaker NGL exports and margins. The sale of the Gulf Coast Express Pipeline is also a contributing factor. However, the Marketing & Specialty segment shows potential for improvement, with earnings expected to return to historical seasonal levels. The Renewable Fuels segment is projected to experience a loss due to the transition from BTC to PTC, although a modest contribution from the 45Z PTC is anticipated. These mixed results across segments underpin the Hold rating.
In another report released yesterday, Jefferies also maintained a Hold rating on the stock with a $110.00 price target.