Analysts’ ratings for Andeavor
Andeavor (ANDV) is currently being covered by 14 Wall Street analysts, 11 (or 79%) of whom have rated it as a “hold.” The remaining three analysts have rated the stock as a “buy.”
These ratings reflect a change from the situation ANDV faced in April, when 16 analysts (or 80%) rated it as a “buy.” The radical change came after April 30, when Marathon Petroleum (MPC) announced its acquisition of ANDV.
Recently, Mizuho put a target price of $158 per share on ANDV. The stock’s mean price target of $154 per share implies a potential rise of ~3% from its current level. As per the acquisition deal, ANDV shareholders may choose 1.87 MPC shares or $152.3 in cash (subject to a ceiling of 15% of equity consideration) for every share of ANDV.
Why such a radical change?
ANDV’s ratings have changed as the number of analysts covering its stock has decreased. Most of the analysts who continue to cover the stock have downgraded it. The majority of the downgrades have likely resulted from the steep surge in ANDV’s price. The stock has risen 22% since the acquisition announcement led by the acquisition news and the company’s better-than-expected first- and second-quarter earnings results. The market seems to have viewed the deal favorably for ANDV.
The acquisition of ANDV is expected to close in the second half of 2018 subject to the requisite approvals. The development will create the largest downstream company in the United States, capable of creating vast synergies, earnings, and cash flows. MPC has been rated as a “buy” by 92% of analysts.
ANDV’s peers Valero Energy (VLO) and Phillips 66 (PSX) have been rated as “buys” by 67% and 41% of analysts, respectively. Smaller players Delek US Holdings (DK), PBF Energy (PBF), and HollyFrontier (HFC) have been rated as “buys” by 93%, 47%, and 31% of analysts, respectively.