Analyst ratings for Andeavor
The graph below shows that 14 (or 82%) of the 17 analysts covering Andeavor (ANDV) have rated it a “buy” in October 2017. Another three analysts have rated ANDV a “hold.” ANDV’s mean price target of $113 per share implies around an 8% gain from the current level.
Change in ratings and target prices in 3Q17
In 3Q17, Scotia Howard Weil downgraded Andeavor from “sector outperform” to “sector perform.” However, the company raised ANDV’s target price from $103 per share to $112 per share. Also, Deutsche Bank raised ANDV’s target price from $106 to $113. Plus, Morgan Stanley, which has an “overweight” rating on the stock, also increased ANDV’s target price from $110 to $120.
Andeavor’s peers Valero Energy (VLO), Phillips 66 (PSX), and Marathon Petroleum (MPC) have “buy” ratings from 52%, 42%, and 79% of analysts, respectively. Smaller players Delek US Holdings (DK), PBF Energy (PBF), and HollyFrontier (HFC) have “buy” ratings from 22%, 29%, and 29% of analysts, respectively.
But why the “buy” ratings?
Andeavor is leaping forward on its growth path with acquisitions, including its recent Western Refining (or WNR) acquisition. Andeavor continues to integrate WNR. Andeavor achieved $80 million in annual run-rate synergies by August 8, 2017. The company expects annual synergies of around $350 million–$425 million through the integration of WNR by June 2019. Overall, Andeavor expects operational improvements of $475 million–$575 million in 2017.
Andeavor’s ongoing growth activities span across its refining, logistics, and marketing segments. We’ll look at the details later on in this series. With growth activities in place and an improving refining environment, Andeavor is likely to see better earnings in 3Q17. No wonder most analysts’ rate Andeavor a “buy”!
Read on to the next part of this series to learn what analysts expect from Andeavor’s dividend in 4Q17.