Raymond James Sets $205 Target on PSX as Refining Margins Nearly Double

Phillips 66 (NYSE:PSX) has been 1 of the vigor sector's standout performers, with shares up 5.60% implicit the past week, 21.21% implicit the past period and 41.02% year-to-date. The banal precocious touched a 52-week precocious of $185.37, with shares presently trading astir $184.12. The Street statement people sits astatine $162.33, but Raymond James is making a bolder call, raising its terms people to $205 portion maintaining an Outperform rating. That people stands good supra statement and implies meaningful upside from existent levels. Can PSX realistically scope $205 by extremity of 2026?

Raymond James raised its people from $175 to $205, anchoring the thesis successful geopolitical tailwinds reshaping refining economics. WTI crude surged from $65.87 connected Feb. 27 to $91.85 by March 13 arsenic Middle East tensions escalated. Raymond James acknowledges that short-term refiners whitethorn conflict to afloat seizure "spiky" near-term margins, but argues that guardant portion margins suggest considerably higher net imaginable successful Q2 and beyond, with medium-term upside apt to predominate marketplace absorption arsenic elevated refining margins persist good aft the struggle subsides.

1. Refining borderline expansion: Worldwide realized refining margins astir doubled, reaching $12.48 per tube successful Q4 2025 versus $6.08 per tube successful Q4 2024. Phillips 66 absorption is bullish connected 2026, with commercialized enactment noting that "if you look toward the commencement of outpouring turnarounds, we judge the refining strategy volition person occupation keeping up with demand" , a structural setup supporting sustained borderline compounding.

2. WRB acquisition and dense crude leverage: Acquiring the remaining 50% of WRB Refining accrued Phillips 66's vulnerability to Canadian dense crude differentials by 40%. Management notes that each dollar of crude differential widening is worthy $140 cardinal successful yearly net , a sensitivity that amplifies returns arsenic dense crude dips stay favorable.

3. Shareholder instrumentality engine: Phillips 66 has distributed $14.3 cardinal to shareholders since July 2022, with a existent yearly dividend of $4.75 per stock and a 2.69% dividend yield. CFO Kevin Mitchell's currency travel model targets astir $1.5 cardinal successful yearly indebtedness simplification implicit the adjacent 2 years, alongside increasing buybacks.