Phillips 66 Downgraded, Faces Potential Selling Pressure Despite Success in Proxy Battle

Phillips 66 (PSX) has been downgraded by Scotiabank, with analyst Paul Cheng adjusting the rating from Outperform to Sector Perform and maintaining a price target of $133. Elliott Management, the activist investor, may consider divesting from the stock, potentially leading to short-term selling pressure. Analysts are cautioning investors to remain vigilant as the upcoming Q2 report presents significant challenges for Phillips 66.

On July 11, 2025, Phillips 66 (PSX, Financial) received a rating downgrade from Scotiabank, with analyst Paul Cheng adjusting the rating from "Sector Outperform" to "Sector Perform." The analyst maintained a price target of $133.00, reflecting Scotiabank's updated assessment of the company's market performance potential [1].

The downgrade, while not accompanied by an updated price target, signals a shift in analyst sentiment. Phillips 66, a key player in the energy sector, may see this change influence investor decisions as they reassess portfolios and adjust strategies based on the new rating. The announcement could have implications for the company's stock performance in the coming months.

Wall Street analysts forecast an average target price of $133.14 for Phillips 66, with a high estimate of $156.00 and a low estimate of $110.00. The average target implies a downside of 0.93% from the current price of $134.39 [1]. Based on the consensus recommendation from 21 brokerage firms, Phillips 66's average brokerage recommendation is currently 2.4, indicating an "Outperform" status [1].

Elliott Management, an activist investor, may consider divesting from the stock, potentially leading to short-term selling pressure. Analysts are cautioning investors to remain vigilant as the upcoming Q2 report presents significant challenges for Phillips 66.

Phillips 66 recently reported earnings of $0.90 per share for the quarter, missing analysts' consensus estimates of $0.07. The company had revenue of $31.92 billion during the quarter, compared to the consensus estimate of $31.93 billion [2]. Phillips 66 had a return on equity of 4.83% and a net margin of 1.32%.

The company also declared a quarterly dividend of $1.20 per share, a boost from its previous quarterly dividend of $1.15. This represents a $4.80 dividend on an annualized basis and a yield of 3.67% [2].

Phillips 66's payout ratio is presently 109.34%, which may raise eyebrows. However, the cash flow coverage ratio of 66.1% underscores the sustainability of these payments [3].

References:
[1] https://www.gurufocus.com/news/2971870/phillips-66-psx-rating-downgraded-by-scotiabank-psx-stock-news
[2] https://www.marketbeat.com/instant-alerts/filing-us-capital-wealth-advisors-llc-purchases-5445-shares-of-phillips-66-nysepsx-2025-07-09/
[3] https://www.ainvest.com/news/phillips-66-dividend-champion-navigating-energy-transition-2507/