BMO Sees Phillips 66 (PSX) Breaking into New Highs

Phillips 66 (NYSE:PSX) has been on a sturdy rally this 12 months, posting features of over 110% since the starting of 2026. The outperformance has been pushed by an unusually sharp surge in international refining margins amid the conflict in the Middle East, which has considerably tightened the world’s refining capability and decreased provides of gasoline, diesel, and jet fuel.

Given Phillips 66’s substantial outperformance in contrast to the wider market, traders may be questioning whether the stock’s record-setting run has reached its peak. However, the analysts over at BMO Capital see further upside forward. On September 17, the firm raised its price goal on PSX from $260 to $310, while sustaining an ‘Outperform’ score on the shares. The goal increase implies an upside of 13% from the present ranges and even exceeds the stock’s all-time high of over $274 achieved earlier this month.

BMO Capital highlighted Phillips 66’s built-in business model, noting that it has gained momentum and outperformed its particular person segments, supported by sturdy execution across the portfolio. While Refining and Renewables stay the cyclical leaders, BMO also sees a favorable medium-term growth outlook for the company’s Midstream business.

The Refining Windfall Keeps Rolling:

BMO Capital’s vote of confidence comes amid a broader optimism surrounding Phillips 66, with analysts from Morgan Stanley, Raymon James, UBS, and several others also enhancing their respective outlooks on PSX. This suggests that Wall Street expects the ongoing refining upcycle to last longer than beforehand expected, notably following the renewed escalations between Iran and the United States.

The provide disruptions now prolong beyond the troubled area, as a current wave of Ukrainian attacks on Russian refineries has further decreased international refining capability and offered further support to margins.

Phillips 66 has already demonstrated that it can convert the unusually favorable refining atmosphere into materials earnings and money flows. The company’s web income came in at $3.85 billion in the second quarter, up from $877 million a 12 months in the past, and marking its strongest ​quarterly revenue since Russia’s invasion of Ukraine in 2022.

The stronger money technology has enabled Phillips 66 to improve its stability sheet, with web debt falling by almost 25% sequentially to $16.5 billion. The refiner stays on monitor to cut back its web debt to below $16 billion by the finish of 2026. A decrease debt burden means less money is required for curiosity and debt-related obligations, leaving more of the company’s money technology obtainable for shareholders.

Given the stronger financial place, PSX authorized a $10 billion growth of its share repurchase program in July.

A Refining Cooldown Could Hit Hard:

The major concern for Phillips 66 is that its unusually sturdy Q2 efficiency was pushed by extraordinary market situations that may already be priced into the stock. As a outcome, even a modest decline in international refining margins could set off a vital pullback in the share price. PSX’s aggressive shareholder return strategy may also be more durable to maintain if crack spreads return to normalized ranges.

Conclusion:

BMO Capital’s choice to raise its price goal on PSX suggests that the stock’s rally may have further room to run, supported by a sturdy refining backdrop, improved stability sheet, and a bigger buyback program. However, the company’s spectacular rally leaves it susceptible if refining margins retreat from their elevated ranges and earnings expectations start to normalize.

Market Sentiment:

Phillips 66 (NYSE:PSX) was held by 69 hedge funds in the Insider Monkey database at the finish of Q2 2026, with a complete investment worth of $5.63 billion. This was up from 64 hedge fund traders with a cumulative stake worth of $5.55 billion in the earlier quarter.

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This article is initially revealed at Insider Monkey.