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ConocoPhillips (COP - Free Report) is a Zacks Rank #5 (Strong Sell) that is involved in the exploration and production of oil and natural gas.The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids in the United States and internationally.
The stock was one of the best performers in 2022 as oil prices took off and stayed elevated. However, oil prices have been under pressure of late, which has brought down energy stocks like COP.
The company just disappointed on earnings, which has caused analysts to substantially lower estimates. Moreover, the stock just broke technical support, which is having many bulls question how low the stock may go.
About the Company
ConocoPhillips is headquartered in Houston, TX. The company was founded in 1917 and employs 9,500 people. It operates in 13 counties and is one of the worlds largest independent E&P companies based on production and proved reserves.
ConocoPhillips is valued at $135 billion and has a Forward PE of 10. COP holds Zacks Style Scores of “A” in Growth and “B” in both Value and Momentum. The stock pays a dividend of almost 2%.
Q4 Earnings
The company reported earnings on February 2nd, just barely missing expectations. COP reported Q4 at $2.71 v the $2.72 expected and adjusted production fell 0.2% year over year. The miss on earnings was the first since 2020, breaking a win streak of eight quarters.
Conoco guided FY23 production at 1.76-1.80M and sees capex at $10.7-11.3B v 10.2B last year. The company guided FY23 return of capital at $11B, which was light of investors expectations.
Estimates
After the earnings report, analysts lowered their estimates across most time frames. Over the last 30 days, we see numbers going down for the current quarter, next quarter, and the current year.
For the current quarter, numbers have dropped 12%, going from $3.01 to $2.66. For Next quarter, we have seen a 3% drop.
For the current year, estimates have gone from $12.09 to $11.42, or 6%
Next years numbers have been going higher over the last 30 days, but these are heavily reliant on oil and gas prices staying higher. Crude oil is currently under the 50-day moving average and struggling to hold the $75 level. A move under $70 would likely bring selling into oil names like COP
Technical Take
Conoco had a big year in 2022, with the stock moving from $70 to a high of $137. That is almost a double, but since those highs set in October, the stock is off by 25%.
Normally a dip like that would be a buy in the stock, but the recent drop in oil prices has brought technical selling in COP. The 200-day moving average has broken for the first time since July of last year. While the stock rallied after that, it might take a while for the stock to recover this time.
Bulls looking to be more patient should eye a move to the $95-100 area. This was a big spot of resistance early in 2022, that could be support now. If that area breaks, the stock would likely drop into the mid-$80s. Depending on where crude oil is, this would likely be a long-term support area.
Summary
So far in 2023, the stock market has seen money rotate out of oil names and into beaten down sectors like tech. Dropping prices in crude oil is part of the reason, but falling earnings estimates are adding to the reasons to sell.
For those interested in the space, a better option in the sector might be Antero Midstream (AM - Free Report) . The stock is a Zacks Rank #2 (Buy) that is coming off an 18% EPS surprise to the upside.
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Bear of the Day: ConocoPhillips (COP)
ConocoPhillips (COP - Free Report) is a Zacks Rank #5 (Strong Sell) that is involved in the exploration and production of oil and natural gas.The company explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids in the United States and internationally.
The stock was one of the best performers in 2022 as oil prices took off and stayed elevated. However, oil prices have been under pressure of late, which has brought down energy stocks like COP.
The company just disappointed on earnings, which has caused analysts to substantially lower estimates. Moreover, the stock just broke technical support, which is having many bulls question how low the stock may go.
About the Company
ConocoPhillips is headquartered in Houston, TX. The company was founded in 1917 and employs 9,500 people. It operates in 13 counties and is one of the worlds largest independent E&P companies based on production and proved reserves.
ConocoPhillips is valued at $135 billion and has a Forward PE of 10. COP holds Zacks Style Scores of “A” in Growth and “B” in both Value and Momentum. The stock pays a dividend of almost 2%.
Q4 Earnings
The company reported earnings on February 2nd, just barely missing expectations. COP reported Q4 at $2.71 v the $2.72 expected and adjusted production fell 0.2% year over year. The miss on earnings was the first since 2020, breaking a win streak of eight quarters.
Conoco guided FY23 production at 1.76-1.80M and sees capex at $10.7-11.3B v 10.2B last year. The company guided FY23 return of capital at $11B, which was light of investors expectations.
Estimates
After the earnings report, analysts lowered their estimates across most time frames. Over the last 30 days, we see numbers going down for the current quarter, next quarter, and the current year.
For the current quarter, numbers have dropped 12%, going from $3.01 to $2.66. For Next quarter, we have seen a 3% drop.
For the current year, estimates have gone from $12.09 to $11.42, or 6%
Next years numbers have been going higher over the last 30 days, but these are heavily reliant on oil and gas prices staying higher. Crude oil is currently under the 50-day moving average and struggling to hold the $75 level. A move under $70 would likely bring selling into oil names like COP
Technical Take
Conoco had a big year in 2022, with the stock moving from $70 to a high of $137. That is almost a double, but since those highs set in October, the stock is off by 25%.
Normally a dip like that would be a buy in the stock, but the recent drop in oil prices has brought technical selling in COP. The 200-day moving average has broken for the first time since July of last year. While the stock rallied after that, it might take a while for the stock to recover this time.
Bulls looking to be more patient should eye a move to the $95-100 area. This was a big spot of resistance early in 2022, that could be support now. If that area breaks, the stock would likely drop into the mid-$80s. Depending on where crude oil is, this would likely be a long-term support area.
Summary
So far in 2023, the stock market has seen money rotate out of oil names and into beaten down sectors like tech. Dropping prices in crude oil is part of the reason, but falling earnings estimates are adding to the reasons to sell.
For those interested in the space, a better option in the sector might be Antero Midstream (AM - Free Report) . The stock is a Zacks Rank #2 (Buy) that is coming off an 18% EPS surprise to the upside.