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Morgan Stanley downgrades refiner Phillips 66

A refinery owned by Phillips 66 in Ponca City, Okla.
Sue Ogrocki | AP

Phillips 66 shares could come under pressure due to earnings downside risk, according to Morgan Stanley, which downgraded the shares of the oil refiner to equal weight from overweight.

Warren Buffett's Berkshire Hathaway is Phillips 66's largest shareholder and the legendary long-term investor has been adding to his position this year, according to filings. But the short-term outlook is in doubt, says Morgan Stanley.

"Changed macro significantly reduces 2016 earnings and cash flow. The macro refining circumstances have changed since our 2016 bullish outlook. We now expect both weaker crack spreads and lower light crude differentials in 2016," Morgan Stanley's Evan Calio wrote about the refining industry in a note to clients Friday.