DBS analyst Suvro Sarkar maintained a Buy rating on Valero Energy (VLO – Research Report) yesterday and set a price target of $150.00.
Suvro Sarkar has given Valero Energy a Buy rating due to a combination of factors, including the company’s strong positioning and strategic advantages. Valero Energy boasts a significant presence in the US Gulf Coast and mid-continent regions, where it is the largest player. This positioning affords Valero considerable sourcing flexibility, allowing it to process various feedstocks and access an abundant skilled labor pool. Furthermore, Valero’s ability to adjust product yields in response to market conditions enables the company to capture higher margins, solidifying its competitive edge.
Another critical aspect of Sarkar’s Buy rating stems from Valero’s efforts to mitigate potential decreases in core earnings. While acknowledging possible moderation in refining margins and inventory gains, Sarkar is optimistic about the growing contribution of Valero’s renewable fuels division. With higher margins than traditional petroleum products, renewable fuels are expected to bolster Valero’s performance from 2025 onward. Additionally, Valero’s investment in sustainable green business and the forecasted expansion of its renewable diesel and sustainable aviation fuel capacities are seen as key differentiators that will enhance the company’s financial health and justify a higher valuation.
In another report released yesterday, Barclays also maintained a Buy rating on the stock with a $149.00 price target.
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Valero Energy (VLO) Company Description:
Founded in 1980, Texas-based Valero Energy Corp. manufactures and markets transportation fuels and other petrochemical products. The company operates through three business segments: Refining, Ethanol and Renewable Diesel.
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