In this part, we’ll discuss analysts’ ratings for downstream companies after their fourth-quarter earnings.
Marathon Petroleum (MPC), Valero Energy (VLO), HollyFrontier (HFC), and Phillips 66 (PSX) have been covered by 19, 20, 18, and 19 analysts, respectively. Among the analysts, 100%, 70%, 22%, and 63% of the analysts recommended Marathon Petroleum, Valero Energy, HollyFrontier, and Phillips 66 as a “buy,” respectively. We’ll discuss Marathon Petroleum and Valero Energy in this part.
Marathon Petroleum had 100% “buy” ratings, which shows analysts’ positivity towards the stock. The company’s mean target price is $94 per share, which implies a 45% gain from the current level—the highest compared to its peers. After Marathon Petroleum’s earnings, J.P. Morgan lowered its target price on the stock from $95 per share to $93 per share. Cowen and Company cut its target price from $97 to $94.
In 2018, Marathon Petroleum’s earnings grew sharply due to the Andeavor acquisition. Marathon Petroleum remains confident that it can achieve the stated synergies. The company is still focused on its capex. Marathon Petroleum has ongoing projects to modernize its refining segment, enlarge its midstream segment, and expand its footprint in the marketing segment. In the upcoming quarters, Marathon Petroleum’s earnings are expected to rise as it continues to integrate Andeavor.
After Valero Energy’s earnings, Raymond James raised its target price on the stock from $100 to $105. Valero Energy’s mean target price of $107 per share implies a 27% gain from the current level—the second highest among its peers.
Most analysts continue to rate Valero Energy as a “buy” due to its better-than-expected fourth-quarter earnings. Analysts expect Valero Energy’s earnings growth to accelerate next year. The company’s earnings are expected to rise 2% in 2019 and 52% in 2020. Most of the US refiners are expected to post a decline in their earnings in 2019.