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Phillips 66 (NYSE:PSX) rallies after upgrade despite leakage issues

Boston, MA 07/09/2013 (wallstreetpr) – Phillips 66 (NYSE:PSX), an independent downstream energy company, claims that the leaked pipe in Fort Lodge has leaked less than 600 barrels or about 25k gallons of gasoline which is significantly lower than the earlier estimate of more than 1000 barrels. It also claims to repair the pipe successfully within less than five minutes after detecting a leak. The Environmental Protection Agency is still examining the pipeline that carries gasoline and diesel from Billings to Wyoming, Utah and Colorado. The cause of the leak has not been determined yet. On a similar note, on Thursday the company had a failure in the pump seal in the gas unit at the tail of its Santa Maria refinery. The failure was repaired and the refinery is currently back to its usual operations.

The market seems to have already discounted this news, as the stock of Phillips 66 (NYSE:PSX) rallies off its Thursday bottom of 54.80, currently trading at $58.71, up by 2.67% after hitting an intraday high of $59.17. Analysts are getting bullish, with increasing views that the stock price will rally by a high magnitude. Wells Fargo (NYSE:WFC) has just upgraded the stock to Outperform. The valuation range has been readjusted to $58-$68 from $54-$67. The stock’s price to earnings ratio of 7.7, much lower than 17.7 of the S&P makes the valuation compelling. Combined with a decent return on equity and robust cash flows from all the three segments the company operates in, i.e. Refining and Marketing, Midstream and Chemicals, the valuation make the stock lucrative for many investors at the current level, about 17% off from its 52-week high.

Phillips 66 (NYSE:PSX) has recently entered into an agreement with General Electric (NYSE:GE) to get private label credit card support for Phillips customers. According to the agreement, GE Capital Retail Bank will take over the current card program assets from Citibank.

Published by Nicholas Maithya

Nicholas is a Financial Analyst by profession, who enjoys writing about investments, technological developments, business, economics and other financial topics at various financial publications. Join him here on as he endeavors to deliver to you the latest breaking news on the above mentioned fronts. Contact him by email at or follow Nicholas Kitonyi @nmaithyak on Twitter.

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