Roth Capital Partners has reduced its recommendation on ConocoPhillips to Neutral from Buy, citing concerns that the company lready reflects much of its growth potential in the share price and that global crude markets may be approaching a near-term high.
The brokerage noted that ConocoPhillips is trading in the vicinity of its target, opening the possibility of downside, particularly in the first half of 2026 if supply growth continues to outpace demand. Roth sees rising inventories as a key factor that could put pressure on prices.
On supply, Roth highlighted that OPEC+ increased output by roughly 2 million barrels per day between April and December 2025. The firm expects that additional supply to keep markets oversupplied through most of 2026. While Roth acknowledged that demand appears stable and that supply disruptions from countries such as Russia and Iran remain possible, the brokerage expects inventory accumulation to be the dominant influence on prices.
Valuation drove Roth apital lients ecision. The firm set a $112 price target based on an 8.6x multiple of its 2026 cash flow estimate. By its calculation, ConocoPhillips trades at about 8.5x 2026 debt-adjusted cash flow and generates roughly a 4% free cash flow yield. Those metrics, Roth argued, imply that much of the companyuture growth trajectory is already reflected in current quotations.
Despite the downgrade, Roth emphasized ConocoPhillipsundamentals. The firm described the company as one of the stronger operators in the sector, pointing to a long inventory life, low supply costs and a geographically diversified portfolio that underpins steady production growth over the next decade. Roth also noted a corporate cash flow breakeven below $50 per barrel, which provides resilience if commodity prices weaken.
The balance sheet was highlighted as a positive element. Roth expects the company026 net debt to EBITDA ratio to be about 0.8x, and observed that management has regularly returned about 45% of operating cash flow to shareholders through dividends and buybacks. Roth expects that shareholder return pace to continue even in softer price environments.
Looking further ahead, Roth sees considerable free cash flow growth potential. Management ims for a $7 billion increase in free cash flow between 2025 and 2029, driven by cost reductions and liquefied natural gas projects. Roth cautioned, however, that a large portion of those benefits is expected to materialize later in the decade and may already be incorporated into the stock price.
In sum, Roth apitallagged valuation and an expected period of supply-driven price pressure as the reasons for trimming its rating on ConocoPhillips, while recognising the company's strong operational and financial positioning.