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ConocoPhillips Stock Plunged 10% This Year; Analysts Expect More Downside Ahead

Conocophillips stock

ConocoPhillips (NYSE: COP) stock price lost more than 10 per cent of value since the beginning of this year due to lower oil demand from China. The coronavirus outbreak has significantly slashed oil demand from the second-largest economy; the country accounts for almost 20 per cent of global oil imports. Oil prices declined sharply in the past couple of weeks amid lower oil demand.

The oil demand is likely to drop by 435,000 barrels per day (bpd) year-on-year in the first quarter according to the International Energy Agency (IEA). ConocoPhillips is the world’s largest exploration and production company. Its business and financial performance is directly correlated to oil prices.

COP ConocoPhillips Company daily Stock Chart

Ryan Lance Expects More Pressure on Financial Numbers

ConocoPhillips says the coronavirus impact is likely to hinder its previous financial forecasts due to lower demand and inventories build-up. The company declined its production and financial outlook for the March quarter and fiscal 2020. ConocoPhillips Chief Executive Officer Ryan Lance claims that oil demand could see a 100,000 to 200,000 barrel per day decline this year due to the outbreak of the virus in China.

The CEO also anticipated pressure on oil prices in the coming days. ConocoPhillips reduced its 2020 production outlook from 1.27ml barrels of oil equivalent per day to the range to 1.23ml. Lower production forecast and oil price outlook could impact COP’s cash generation in fiscal 2020 in the analyst’s view.

The Analysts are Showing Concerns on ConocoPhillips Stock Performance

The market analysts are presenting the gloomy outlook for the COP share price. They believe the largest exploration & production company will accelerate the declining trend in 2020 after posting a double-digit revenue drop in fiscal 2019. This situation could also negatively impact its cash returns for investors. The company had recently announced to buyback $10bn of common outstanding stock in 2020.

ConocoPhillips Stock Plunged %...

“Given COP’s consistent outperformance for the last two years, guidance slightly below consensus expectations will probably slightly tarnish the company’s gold reputation,” Scotiabank analyst Paul Cheng said.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.