Oppenheimer Cuts Valero Energy Price Target To Reflect Generally Weak Energy Markets


Oppenheimer analyst Fadel Gheit reiterated an Outperform rating on Valero Energy (NYSE:VLO) but reduced his price target to $60 (from $65), which represents a potential upside of 25% from where the stock is currently trading.

Gheit commented: “We expect VLO’s operating cash flow of $5.2B in 2015 to fund $2.8B in CAPEX and $0.6B in dividend and distribution, for free cash flow of >$1.8B, which can be used to accelerate its share buyback, increase the dividend, pay down maturing debt, and boost investments in high-return projects.”

The analyst continued, “Our estimates reflect updated company guidance, commodity prices, and industry outlook. In 3Q14, Valero completed its first drop-down sale of $154M to Valero Energy Partners LP, which is an attractive, low- cost source of capital to support Valero’s core business operations. We reduce our price target to reflect generally weak energy markets.”

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Fadel Gheit has a total average return of 5.9% and a 57.8% success rate. Gheit has a 1.6% average return when recommending VLO, and is ranked #805 out of 3401 analysts.

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