On Wednesday, Mizuho Securities adjusted its outlook on Valero Energy (NYSE: NYSE:VLO) shares, reducing the price target to $165 from the former $171 while maintaining a Neutral rating on the stock.
The revision comes in response to anticipated shortfalls in earnings before interest, taxes, depreciation, and amortization (EBITDA), free cash flow (FCF), and earnings per share (EPS) for the second quarter of 2024. Valero is projected to miss the current consensus estimates by 12% for EBITDA, 11% for FCF, and a significant 32% for EPS.
The company, recognized for its strong operational performance and utilization rates exceeding the midpoint of its guidance, has not been able to fully navigate through the challenging macroeconomic environment.
The lower-than-expected financial results are primarily attributed to diminishing refining margins. Factors contributing to this situation include reduced butane blending, weaker demand for secondary products, and less advantageous crude oil price differentials.
Despite these headwinds, Mizuho reiterated its Neutral stance on Valero Energy, acknowledging the company's status as a top-tier operator in the industry. The firm's new price target of $165 is based on a net asset value (NAV) approach, reflecting the adjustments made due to the less favorable financial metrics experienced in the quarter.
Valero's upcoming financial report for the second quarter is expected to provide further insights into the company's performance amid these challenging market conditions. Investors and industry observers will be closely monitoring the company's ability to manage margins and navigate the current economic landscape.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.