TD Cowen raised its 12-month price target on Phillips 66 (PSX) to $155.00 from $151.00, keeping a Buy rating on the shares. The updated target sits just under the stock's 52-week high of $155.99, while PSX is trading around $154.43. Data incorporated into the analysis indicates the stock may be slightly undervalued on a Fair Value basis.
The research note attributes the target increase to improvements in refining operational expenses and a meaningful capacity gain. Phillips 66 has brought an additional 45,000 barrels per day of refining capacity online, a development TD Cowen views as a tangible positive for the company’s refining segment.
TD Cowen also pointed to near-term catalysts that could support refining results, including inland seasonality and widening Western Canadian Select differentials. These dynamics, the firm said, could supply upside to refining margins in the near term.
Despite these favorable elements, Phillips 66 continues to report a relatively modest gross profit margin of 12.3%. On a valuation basis, the company trades at a price-to-earnings ratio of 14.34, according to the same data set referenced by the research team.
On the midstream side, the analyst note relays that Phillips 66 expects the Midstream segment to remain stable through the first half of 2026. However, TD Cowen's forecast diverges further out, projecting Midstream EBITDA could be about $0.2 billion below company guidance by the end of 2027. That projected shortfall represents a specific downside scenario for a material part of Phillips 66’s business mix.
The firm suggested a potential path for stronger overall performance in the second half of 2026, contingent on a ramp in Midstream activity and an improvement in the chemicals business. At the same time, TD Cowen noted uncertainty about whether the Marketing segment will capture benefits from Renewable Identification Number pricing, leaving that revenue stream in question.
Momentum in the equity has been strong, with a 31.24% price return over the past six months. That price action reflects market recognition of recent operational developments, though the research note stops short of asserting continued directionality.
Recent quarterly results
Phillips 66 reported fourth-quarter 2025 results that combined an adjusted earnings-per-share beat with a revenue shortfall. The company posted adjusted EPS of $2.47, exceeding analyst expectations of $2.25. Revenue for the quarter came in at $32.14 billion, below the consensus projection of $34.14 billion.
Those outcomes produced a mixed signal: stronger-than-expected profitability on an adjusted EPS basis alongside weaker top-line performance. The market reaction favored the EPS beat in the immediate aftermath, though the research commentary does not provide specific details on subsequent share price movement tied to that release.
Takeaway
TD Cowen raised its price target on Phillips 66 based primarily on operational improvements in refining, including lower operating expenses and a 45,000 bpd capacity addition. The research house flagged near-term refining tailwinds from seasonality and WCS differentials, while also noting modest profitability metrics and a mid-teen P/E. Midstream forecasts and uncertainty around Marketing's exposure to RIN pricing remain notable open issues that could influence results through 2027 and beyond.