What Are Analysts’ Estimates for Downstream Companies?



Moving averages

As of January 29, 2016, large-cap downstream companies rose by an average of 3.6%. On average, upstream companies rose by 4.5%. The US Gulf Coast crack spread closed at $9.42 as on January 29—compared to $7.62 the previous day.

Overall, these refiners are trading 12.5% below their respective moving averages. Delek US Holdings (DK) and Alon USA Energy (ALJ) were trading 33% and 22%, respectively, below their 100-day moving averages. Other refiners including Valero Energy (VLO) and PBF Energy (PBF) were trading 1.6% and 2.8% above their respective moving averages.

Currently, Valero Energy is trading near its highs in April 2007. In the past year, the price range of $70–$72 is a strong resistance for the stock. Currently, the stock is trading around $67.87. Since November 2015, the stock moved up and down. It’s lingering near $70–$72.

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Wall Street analysts’ consensus estimates

Wall Street analysts’ consensus estimates suggest that the ten major large-cap refiners might return 35.3% on average over the next 12 months compared to upstream companies’ 31.6%. Phillips 66, Valero Energy, Marathon Petroleum, and Tesoro could rise by 17.5%, 19.2%, 56.5%, and 40.2%, respectively, from their current levels.

Wall Street analysts’ consensus estimates for the next 12 months for most of the above US (SPY)-based refiners except Alon USA Energy have been reduced from their levels since January 15, 2016. For example, where the consensus estimate indicated a $97 price range for Phillips 66, it’s indicating a target price of $94.25 for the next 12 months.


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