XOM - Phillips 66: Analyzing Activist Elliot Management's $200 Price Target

2024-01-24 14:41:30 ET

Summary

• Activist investor group Elliot Management invested $1 billion in Phillips 66 and claims its plan can unleash significant shareholder value.
• Elliot points out that PSX has significantly lagged behind its refining peers like Valero and Marathon Petroleum and says its plan could increase PSX stock to $200/share.
• However, PSX already had a plan to increase shareholder returns, and both plans focus on reducing PSX's op-ex/bbl and on selling non-core assets.
• Unfortunately, one of the biggest obstacles to increasing PSX's performance is its Chemicals Segment, which appears to be in a race to the bottom with Exxon, DOW, and others.

Last November, Reuters reported that activist investor group Elliot Management took a $1 billion dollar stake in Phillips 66 ( PSX ). In a letter to Phillips 66 management , Elliot pointed out what I have been writing about on Seeking Alpha for quite some time: PSX has been significantly lagging the returns of refining peers Valero Energy Corporation ( VLO ) and Marathon Petroleum Corporation ( MPC ) for many years (see graphic below). Elliot proposed a pathway that it believes could take the stock to $200/share (+50% from the current $132 share price). Today, I'll dig a bit deeper to see if that target is reasonable. If so, shares of PSX would obviously represent excellent value here....

For further details see: