Mizuho cuts Phillips 66 to neutral as rally prices in gains

Mizuho Securities downgraded Phillips 66 to neutral from outperform on Thursday, October 8, 2026. The brokerage also cut U.S. refiners Delek US Holdings and Par Pacific Holdings, stating that a powerful rally has largely priced in higher earnings.

Mizuho raised its price target for Phillips 66 to $300 from $220, which offers about 10% upside. The firm noted that the current share price already reflects most operational improvements in refining and near-term profit gains from wider crack spreads.

Across the sector, Mizuho lifted price targets by about 40% on average, leaving only about 4% average upside. Refining stocks have surged about 152% this year, outpacing gains of 42% for XLE, 48% for XOP and 14% for the S&P 500. On two-year forward estimates, the group trades at about 8.5 times enterprise value to EBITDA, roughly two standard deviations above its 6.7 historical average.

The brokerage updated its blended U.S. crack spread assumptions to about $42 a barrel in 2026 and $34 in 2027, before easing to $28 from 2028, compared with a prior long-term view of $24. It highlighted persistent conflicts in the Middle East and Ukraine, contained Chinese exports, record third-quarter U.S. refinery utilization of 96.3%, and refinery maintenance capacity losses rising to nearly 7% in 2027 from 5% in 2026.