Phillips 66

With the results of Phillips 66 around the corner, the stock price has been appreciating over the past few weeks. The company is operating in a positive market environment that is driven by tight worldwide demand and supply balance. The management has maintained solidity in its operations in the successful completion of the company’s spring turnaround activities. Phillips 66 had delivered an all-around beat in its last result and resumed its share repurchase program in the second quarter. Among major updates, Phillips 66 has offered to acquire the public units of DCP Midstream, the natural gas company, to boost its business of natural gas liquids. In refining, the company made a final investment decision for moving forward with the company’s Rodeo Renewed project for converting the company’s San Francisco refinery into the largest renewable fuels facilities in the world. With global refineries that run near max capacities, distillate and gasoline remain low, which supports elevated refining margins. From the macro perspective, CPChem has seen strong demand for maximum products, particularly polyethylene. We provide the stock of Phillips 66 a ‘Hold’ rating and a revision in the target price.