ANDV’s implied gain
In the previous article, we reviewed HollyFrontier (HFC), which has the sixth-highest implied gain among its peers based on Wall Street analysts’ mean target price.
Now let’s consider the stock that’s expected to post the lowest gain: Andeavor (ANDV).
ANDV stands in last place with a 4% implied gain based on its target price. Andeavor is an American downstream company with refining, logistics, and marketing segments. The sharp fall in ANDV’s implied gain was due to the steep rise in its stock price after Marathon Petroleum (MPC) announced its acquisition of ANDV on April 30. The acquisition is expected to close on October 1.
Analysts’ mean target price on Andeavor stock has risen 40% in the past year to its current level of $156.3. The stock has risen 44% in the same period. As per the acquisition deal, ANDV shareholders could choose 1.87 MPC shares or $152.3 in cash (subject to a ceiling of 15% of equity consideration) for every share of ANDV.
ANDV is being combined with MPC. The merged entity will benefit from both companies’ growth plans. The entity will also benefit from large capacities, a vast network, huge earnings, and massive synergies.
ANDV’s shareholder returns
Andeavor has consistently returned wealth to its shareholders in the form of dividends and share buybacks. In the first half, ANDV returned $439 million to its shareholders, including $181 million in dividend payments and $258 million in share buybacks. ANDV’s current dividend yield stands at 1.6%, the lowest among its refining peers.
Overall, ANDV has the lowest implied gain and dividend yield.