Boston, MA 10/06/2014 (wallstreetpr) – A Barron’s report presented the case of hidden potential in Valero Energy Corporation (NYSE:VLO) as seen by Analyst, Brad Heffern, of RBC Capital Markets. However, the underlying ability of the stock is largely misjudged on the background of tumbling oil prices.
Valero’s Positive
During the close of last week, Heffern initiated the coverage on the company setting the price target at $66, which represents nearly 45% of the upside on the company’s last closing price. In his note, Heffern stated that Valero Energy Corporation (NYSE:VLO) is a refiner, which is best-placed to take advantage from crude spreads at the Gulf Coast. It is further anticipated to widen by the second half of 2015 till 2016.
The company has made some large and fresh investments in light crude procession, which in turn, should add to the positives for the company in the period going forward. Also, the MLP drop down scenario is also getting all prepped up according to Heffern. Despite the presence of positive factors attached to the company, the share market appears to give little weight on its prospects as the stock dipped marginally on Friday.
Other Players
Other than Valero Energy Corporation (NYSE:VLO), Heffern also pointed out to the potential in Tesoro Corporation (NYSE:TSO) and Marathon Petroleum Corp (NYSE:MPC). According to him, Marathon’s portfolio is a perfect mix of both Gulf coast export markets and cheap inland crude located in the Midwest.
Moreover, the company’s latest takeover of Hess should also boost its retail value in the approaching times. Heffern sees Marathon at an early level of drop down cycle and thus, should be able to generate handsome cash returns to its stakeholders. At the same time, Tesoro Corporation (NYSE:TSO) to should witness improved margins helped by the synergies of its BP acquisition. Heffern sees more than $5 per share value hike if Tesoro Corporation (NYSE:TSO) gets approval for the Port of Vancouver. He further said that the possibility of the same is dim, and Tesoro has more reasons to depend on for its growth.
