ConocoPhillips (COP) shares should outperform large-cap Exploration & Production peers, backed partly by its returns-focused value proposition and a strong balance sheet, RBC Capital Markets said in a Sunday report.

"The company appears well positioned to maintain competitive

FCF generation through various commodity price cycles," the note said. FCF refers to free cash flow.

Following its quarterly checks ahead of Q3 results on Nov. 6, RBC analysts said they modelled earnings per share/cash flow per share at the top of the company's sensitivities.

They said the formal outlook for 2026 comes early next year, but there will likely be color on the outlook, which could indicate 1% to 2% organic production growth using $12 billion of capital.

"Using COP's 45% payout trend, our model infers $8.5 billion in shareholder returns," the note said.

RBC raised its price target on the stock to $118 from $113 while keeping its outperform rating.

Price: 88.52, Change: +0.88, Percent Change: +1.00