Is ConocoPhillips Too Big to Grow?
ConocoPhillips (NYSE: COP) has undergone a major transformation over the past few years that has repositioned it to thrive at lower oil prices. This year alone the company has jettisoned more than $16 billion of assets, which along with other initiatives have pushed its breakeven level from $75 a barrel to below $50. That said, despite all the progress, analysts continue to give the company the cold shoulder. In their view, ConocoPhillips is just too big for its own good since it can't grow as fast as rivals.
Earlier this month, for example, Bernstein downgraded the stock to market perform saying that despite all the assets sales it's still too diversified. That diversification mutes the company's growth prospects compared to its peers, which can increase production at a much faster clip these days. Goldman Sachs, likewise, has a muted view on the oil giant, evidenced by its neutral rating. While its analysts like the company's business transformation, and see the sale of the bulk of its Canadian oil sands assets to Cenovus Energy (NYSE: CVE) as a major positive, they don't see any reason to be excited about ConocoPhillips' prospects.
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Source: Fool.com
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