SUN - Sunoco upgraded to Buy at Mizuho citing resilient business model

Sunoco (NYSE:SUN) +2.2% pre-market on Friday as Mizuho upgrades shares to Buy from Neutral with a $44 price target, saying the company's "flexible business model should prove resilient and rising prices/demand destruction are mutually exclusive over the long-term." Sunoco units (SUN) have lagged peers, which Mizuho's Gabriel Moreen attributes to concerns about how rising fuel prices could impact wholesale margins, and the specter of demand destruction also has begun to weigh on sentiment. Following Sunoco's (SUN) 21% unit price decline since February 1, Moreen views the name as attractive, noting the ~9% yield and a balance sheet that remains well-positioned to continue acquiring third-party assets. "Thanks to its resilient business model, its healthy distribution coverage ratio, and its improved balance sheet, SUN can easily maintain its current distribution," Aristofanis Papadatos writes in a bullish analysis posted recently on Seeking Alpha.

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Sunoco upgraded to Buy at Mizuho, citing resilient business model