ConocoPhillips upgraded, CNX cut at J.P. Morgan; says secular tailwinds favor gas over oil

ConocoPhillips (NYSE:COP) +1.3% in Thursday’s trading as J.P. Morgan upgrades to Overweight from Neutral with a $123 price target, largely reflecting the stock’s YTD underperformance vs. large-cap energy exploration and production companies.

ConocoPhillips (COP) recently raised its synergy capture estimate from the Marathon Oil acquisition to $1B, and JPM analysts led by Arun Jayaram believes the company will be one of the few E&Ps in their coverage that raise cash returns in 2025, including $6B of buybacks that should provide support for the stock.

At the same time, JPM downgrades CNX Resources (CNX) to Underweight from Neutral with a $37 PT, saying valuation seems stretched compared to gas-oriented peers.

Additionally, the analysts say they are positive on natural gas fundamentals, and CNX (CNX) has less near-term gas exposure vs. gassy peers given its robust hedge book.

Devon Energy (DVN) and SM Energy (SM) are both cut to Neutral from Overweight, with respective $43 and $53 PTs; a factor supporting the Devon downgrade is the sizable P/E overhang following the Grayson Mill deal.

J.P. Morgan says its top natural gas picks remain Overweight-rated Antero Resources (AR), EQT (EQT) and Gulfport Energy (GPOR), while its favorites for oil exposure are ConocoPhillips (COP), Coterra Energy (CTRA) and Permian Resources (PR).