A recent move by activist investor Elliott Management has sparked a surge in Phillips 66 stock and could signal further growth for the company. In a letter to the board, Elliott expressed its belief that Phillips 66 missed out on the recent refining supercycle due to its decision to de-emphasize refining. This has led to underperformance compared to competitors like Marathon Petroleum and Valero Energy.
While Elliott voiced concerns about Phillips 66’s missteps, it also expressed support for the company’s plans to sell $3 billion of noncore assets and increase capital returns to shareholders. However, Elliott believes more action is needed and is seeking two seats on the board.
Elliott’s involvement has received positive attention from Wall Street analysts. Wells Fargo Securities analyst Roger Reed sees the activist shareholder as a potential catalyst for positive change. He believes that Elliott’s letter may encourage the company to take actions it might not have considered otherwise. Reed has an overweight rating on Phillips 66 shares and a price target of $143.
Phillips 66 has acknowledged receiving Elliott’s letter and has had discussions with the hedge fund. The company welcomes the input of its shareholders and values their perspectives.
With the potential for changes and the support of Elliott Management, Phillips 66 could see a significant increase in its stock price. Elliott believes that shares could rise by 75%, a sentiment that is echoed by bullish analysts on Wall Street.
