VLO - BMO initiates on US refiners - MPC and PSX are buys VLO a hold

BMO initiated coverage of the "big 3" US refiners Tuesday, capturing all the well-understood themes in the sector. Rebounding demand, paired with reduced supply has resulted in elevated margins -- BMO sees the large-cap refiners trading at 6.2x 2022 earnings. The bank notes that "valuation is tricky" because current, elevated margins are not expected to continue indefinitely, resulting in two buys and a hold in the sector:  Marathon (MPC) was initiated as a "buy" given the company's aggressive share buyback program and favorable geographic footprint in PADDs 2&3. Philips (PSX) was initiated as a "buy" as the bank believes the company's refining assets are under-appreciated, and that widening WCS differentials paired with strong diesel margins will flatter results throughout 2022. Valero (VLO) was initiated as a "hold" despite its "best in class" refining footprint, as the bank believes valuation is stretched. Given extreme spot refining margins, and a challenging supply

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BMO initiates on US refiners - MPC and PSX are buys, VLO a hold