- Although upside among oil refiner stocks seems limited now, Goldman Sachs thinks H2 will be characterized by “dispersion, where company-specific, idiosyncratic leaders” such as Valero (VLO -0.8%), Marathon Petroleum (MPC +0.1%) and Delek US (DK +4.2%) will substantially outperform peers.
- Goldman continues to include VLO in its Americas Conviction List, maintaining a Buy rating and $79 price target. and likes MPC, with a Buy rating and $68 target, expecting Gulf coast refiners to benefit from sturdy gasoline margins, capital allocation, wider spreads and appealing valuations going forward.
- The firm upgrades DK to Buy from Neutral, believing it is well positioned to deliver premium free cash flow on the back of capex declines, while downgrading Phillips 66 (PSX +0.1%) to Neutral from Buy to reflect recent appreciation and expected margin pressure, and raising Western Refining (WNR +1.2%) to Neutral from Sell to reflect midstream value, M&A potential and strong Phoenix margins.