VLO - Morgan Stanley boards the refinery bandwagon ahead of Q1 results
Morgan Stanley published a bullish refining note ahead of the market open Monday, lifting price targets across the sector ~25%, as rising refining margins lift earnings estimates. The bank flagged low refined product stocks ahead of summer driving season, and sees no easy solution to rebuilding inventory, beyond persistently high market prices. The note flagged mixed Q1 results, as extreme price volatility near quarter end could result in weak margin capture; however, as summer driving season approaches, the bank is more than 20% above street on Q2 / Q3 earnings estimates across the sector. Analyst Connor Lynagh is tactically bullish on Valero (VLO) and Marathon (MPC) into results, as the two refiners are best positioned to mitigate quarter-end volatility; however, the analyst sees downside to PBF (PBF) and Phillips (PSX) Q1 earnings estimates. With low product inventories, rising seasonal demand, accelerating international travel, restricted Russian and Chinese refining runs and
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Morgan Stanley boards the refinery bandwagon ahead of Q1 results