- BofA Merrill Lynch makes a positive case for leading refiners HollyFrontier (HFC), Valero (VLO) and Tesoro (TSO), believing the rebound in crude spreads signals the early stages of crude saturation on the U.S. Gulf coast and introduces a new layer of seasonal margin volatility that plays to the benefit of the sector.
- The firm upgrades HFC to Buy from Neutral with a $60 price target, up from $51, after HFC has lagged the early seasonal rebound in the U.S. refining sector that has accompanied the expansion in crude differentials.
- VLO is BofA's top pick in the sector; poised to complete a second MLP, VLO can unlock $5-$9/share of value in the stock, the firm says.
- The firm likes TSO's west coast crude advantage and accelerated spending at its MLP.
BofA: 2014 looks good for refiners HollyFrontier, Valero and Tesoro
Dec 3 2013, 19:07 ET