Goldman says buy ConocoPhillips ahead of 'achievable' asset sales
Goldman Sachs upgraded ConocoPhillips (COP) to Buy from Neutral, saying that the company has multiple positive catalysts and the stock is attractive following its weak performance this year. The firm also added the stock to its Conviction List. CATALYSTS: After slashing its dividend by 66%, ConocoPhillips should buy back $1B of its stock from 2017-2018 and grow its annual dividend by 5%-10% annually during the same period, wrote Goldman analyst Neil Mehta. Moreover, although investors are skeptical about the company's ability to sell $5B-$8B of assets by the end of 2017, the goal is "achievable," given its successful sale of assets in the past, Mehta believes. Finally, oil prices should rise in the medium term, and ConocoPhillips should be able to increase its production every year through the end of this decade, the analyst believes. VALUATION, TARGET: ConocoPhillips' valuation is compelling, especially after it underperformed its peers by 22% so far this year, wrote Mehta, who raised his price target on the stock to $54 from $47. PRICE ACTION: In morning trading, ConocoPhillips rose 1% to $46.22 per share.