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ConocoPhillips Wins Shareholder Approval For $9.7B Concho Deal; Street Says Buy

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support@smarteranalyst.com (Ben Mahaney)
·2 min read
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ConocoPhillips completed the acquisition of shale producer Concho Resources after receiving shareholder approval of both companies. Shares of the oil producer fell 5.7% on Friday as crude oil prices slipped.

Back in Oct. 2020, ConocoPhillips had agreed to buy rival Concho in an all-stock deal worth $9.7 billion. Per the merger agreement terms, Concho shareholders will receive 1.46 shares of ConocoPhillips common stock for each share held.

ConocoPhillips’ (COP) CEO Ryan Lance said, “This acquisition results in the combination of two premier companies that can lead the structural change for our vital industry that’s critical to investors.” He added, “We expect the company to deliver differential performance on three key mandates: providing affordable energy to the world, generating superior returns on and of capital and demonstrating ESG [Environmental, social, and governance] leadership.”

In October, ConocoPhillips said that it expects to generate annual cost and capital savings of about $500 million by 2022. (See COP stock analysis on TipRanks).

On Jan. 14, Barclays analyst Jeanine Wai raised the stock’s price target to $59 (30.8% upside potential) from $55 and maintained a Buy rating. The analyst remains positive on the US integrated oil and exploration and production industry, citing constructive view of oil prices, healthy forecasted free cash flow, and solid capital discipline.

Like Wai, the rest of the Street has a bullish outlook on the stock. The Strong Buy analyst consensus boasts 14 unanimous Buys. The average analyst price target of $51.62 implies upside potential of about 14.4% to current levels. Shares have declined by about 28% over the past year.

Furthermore, TipRanks data shows that financial bloggers have a bullish call on the stock.

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