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How Analysts Are Rating Valero ahead of Its 3Q16 Earnings

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Oct. 14 2016, Updated 8:05 a.m. ET

Majority of analysts rating Valero as “buy”

In previous parts of this series, we examined Valero Energy’s (VLO) 3Q16 estimates, refining margin outlook, and stock performance ahead of its earnings release, which is expected on October 25, 2016. In this part, we’ll examine the ratings of analysts covering the stock.

The above table shows that eight of the 11 firms rated Valero Energy (VLO) as a “buy,” “overweight,” or “outperform.” The highest 12-month price target for VLO stands at $73, indicating a 35% gain from current levels.

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The remaining three firms have rated Valero as “hold.” The average 12-month price target for VLO stands at $64, indicating an 18% gain from current levels. None of the above firms have given a “sell” rating to Valero. In fact, even the lowest 12-month price target stands at $58, implying a rise of 7% from current levels.

The highest price target for Valero was set by Barclays, whereas the lowest price target is specified by Piper Jaffray. Goldman Sachs and RBC Capital Markets have assigned higher price targets of $65 and $64, respectively, for VLO.

By contrast, Credit Suisse and Wolfe Research have given “neutral” and “peer perform” recommendations on the stock.

Peers’ analyst ratings

By comparison, HollyFrontier (HFC), Alon USA Energy (ALJ), and Delek US Holdings (DK) have been rated as “buy” by 35%, 10%, and 33% of analysts surveyed, respectively.

If you are looking for indirect exposure to refining sector stocks, you can consider ETFs like the iShares North American Natural Resources ETF (IGE), which has ~6% exposure to refining and marketing sector stocks.

In the next part, we’ll weigh the institutional holdings in Valero Energy’s stock.

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