UBS Remains Bullish on ConocoPhillips (COP) Amid Cost Pressures and Softer 2026 Oil Volume Outlook

Core Insights - ConocoPhillips is currently viewed as one of the top commodity stocks to invest in [1] - UBS has lowered its price target for ConocoPhillips from $122 to $117 while maintaining a "Buy" rating due to cost pressures and a softer oil volume outlook for 2026 [2] - The company reported strong Q3 2025 results, exceeding production guidance and achieving an adjusted EPS of $1.61 per share [3] Financial Performance - In Q3 2025, ConocoPhillips produced 2.399 million barrels of oil equivalent per day, surpassing guidance [3] - The company generated $5.4 billion in cash from operations and returned $2.2 billion to shareholders through dividends and buybacks [3] - Operating cost guidance was lowered to $10.6 billion, while production guidance was raised to 2.375 million barrels of oil equivalent per day [3] Project Developments - The Willow project is experiencing cost pressures, with capital expenditure guidance increased to $8.5-$9.0 billion due to inflation and localized escalation [4] - Despite the increased costs, the first oil from the Willow project is still on track for early 2029 [4] - Management believes the Willow project remains competitive within the company's portfolio [4] Future Outlook - ConocoPhillips anticipates achieving a $7 billion free cash flow inflection by 2029 [5] - The company focuses on oil and gas exploration, production, and LNG development [5]