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Why Analysts Are Feeling Positive about Marathon Petroleum

Maitali Ramkumar - Author

Nov. 28 2018, Published 8:04 a.m. ET

Analysts’ ratings for Marathon Petroleum

Marathon Petroleum (MPC) stock is covered by 17 Wall Street analysts, all of whom have given it “buy” or “strong buy” ratings. MPC is the only American refining stock that has 100% “buy” ratings from analysts.

Recently, Morgan Stanley cut its target price on Marathon Petroleum stock from $110 to $95. Earlier this month, Raymond James lowered its target price on the stock from $115 to $106. Marathon Petroleum’s mean target price of $102 implies a potential ~66% gain from its current level.

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Why are analysts positive on Marathon Petroleum?

With its latest organic and inorganic growth activities, Marathon Petroleum is all set to witness growth in its earnings. On October 1, Marathon Petroleum closed on the acquisition of Andeavor, the largest downstream company in the United States.

Marathon now has large refining capacities, huge midstream assets, and a vast network of retail and marketing stations. MPC expects to generate ~$1 billion worth of synergies over the next three years on a yearly run-rate basis. Wall Street analysts expect MPC’s earnings to rise 30% in 2018 and 52% in 2019.

Marathon Petroleum’s earnings surged in the first nine months of 2018. In the period, its EPS rose 37% year-over-year due to a rise in its operating earnings led by a surge in its midstream earnings. The rise shows that the company’s focus on raising stable midstream earnings is yielding results.

Overall, Wall Street analysts expect Marathon Petroleum to post robust earnings growth with large midstream earnings in the near future.

Peer comparison

Marathon Petroleum’s peers Phillips 66 (PSX) and Valero Energy (VLO) have been rated as “buys” by 50% and 63% of analysts, respectively. Other players Delek US Holdings (DK), PBF Energy (PBF), and HollyFrontier (HFC) have been rated as “buys” by 93%, 44%, and 32% of analysts, respectively.

In the next article, we’ll review the company’s capex position.


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