•Kinder Morgan (KMI -4.3%), Kinder Morgan Partners (KMP -2.7%) and Kinder Morgan Management (KMR -3.3%) are all down sharply after Kevin Kaiser says shorting the stocks is Hedgeye's new Best Idea.
ConocoPhillips (COP) is in the process of divesting $9.6B in assets this year, and Oppenheimer's Fadel Gheit expects it to successfully apply proceeds to help fund new projects and increased production. In raising his target price on COP to $70 from $65, Gheit says the strategy, coupled with a high dividend yield, could lead to 20% multiple expansion and boost the stock.
If they've got $5B for stock buybacks, they've got plenty of cash.
I'll try to forget the $5B in stock buybacks coming as well.
11:26 am ET ... S&P MAINTAINS BUY RECOMMENDATION ON SHARES OF
CONOCOPHILLIPS (COP 58.21****):We lift our '13 EPS view $0.08 to $6.03 and set
'14's at $6.19 (vs. $5.58 in '12). Q4 EPS of $1.43, vs. $1.55, beats our estimate by
$0.01. Organic production was mostly flat in '12. COP sees '13 production of
1.475-1.525 MMBoe/d, below our target, but keeps a 3%-5% per year organic
growth target; we are at the low end. COP is awaiting close on $9.6B in asset
sales, which we think will help fund a $15B capex plan, pay dividends of $3.5B
and $5B in stock buybacks.We see cash flow approaching $15B.We find
valuations attractive and note a top dividend yield (4.5%) among peers. /M. Kay
February 1, 2013
11:52 am ET ... S&P REITERATES BUY OPINION ON SHARES OF MERCK (MRK
42.00****):We lower our 2013 EPS estimate $0.05 to $3.70, which at the upper end
of MRK's $3.60-$3.70 guidance range. However, we maintain our 12-month target
price of $51, applying a modest premium to peers P/E of 12.7X to our $4.00 EPS
estimate for 2014. Impacted by generic erosion in Singulair, Q4 2012 EPS fell 14%
to $0.83, in line with our estimate. Despite recent setbacks, we still see promise in
the R&D pipeline, with four major filings completed last year. Other positives
include strength in the diabetes franchise, vaccines and emerging markets. The
dividend yields 4.1%. /H. Saftlas
Assign a modest PE of 10 to this stock and you have a $40 stock price, right now. In other words it's dirt cheap, sorry ain't goin' to 22.