ConocoPhillips' Marathon Deal: Analyst Sees Short-Term Pain, Long-Term Gain
Portfolio Pulse from Lekha Gupta
ConocoPhillips (COP) is acquiring Marathon Oil Corporation (MRO) in an all-stock transaction valued at $22.5 billion. Roth MKM analyst Leo Mariani expects a negative short-term reaction for COP, but sees long-term benefits. The deal is expected to be accretive to COP's earnings and cash flow. Mariani maintains a Buy rating on COP with a $144 price target.
May 29, 2024 | 6:54 pm
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POSITIVE IMPACT
Investors can gain exposure to ConocoPhillips through the IShares U.S. Oil & Gas Exploration & Production ETF.
IEO holds COP shares, and the acquisition is expected to be accretive to COP's earnings and cash flow, potentially benefiting the ETF.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
POSITIVE IMPACT
Marathon Oil is being acquired by ConocoPhillips in a $22.5 billion all-stock deal. MRO shareholders will receive 0.2550 COP shares for each MRO share.
MRO shareholders will benefit from the acquisition by receiving COP shares, which are expected to be accretive to earnings and cash flow.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100
POSITIVE IMPACT
Investors can gain exposure to ConocoPhillips through the Westwood Salient Enhanced Energy Income ETF.
WEEI holds COP shares, and the acquisition is expected to be accretive to COP's earnings and cash flow, potentially benefiting the ETF.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEGATIVE IMPACT
ConocoPhillips is acquiring Marathon Oil in a $22.5 billion all-stock deal. Analyst expects short-term negative reaction but long-term benefits. COP shares are down 4.19%.
The acquisition is expected to be immediately accretive to earnings and cash flow, but the analyst notes higher costs associated with MRO's assets. This has led to a short-term negative reaction in COP's stock price.
CONFIDENCE 90
IMPORTANCE 100
RELEVANCE 100