Jason Gabelman, an analyst from TD Cowen, maintained the Hold rating on Valero Energy. The associated price target remains the same with $140.00.
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Jason Gabelman has given his Hold rating due to a combination of factors influencing Valero Energy’s current market position. Despite a positive refining outlook, the company faces seasonal downside in gasoline and lighter maintenance schedules in the fall, which could impact its performance. Additionally, Valero’s stock has underperformed compared to its large-cap peers, and there is some investor caution regarding its forward outlook.
Valero’s commitment to returning a significant portion of its cash flow to shareholders is notable, with plans to maintain a payout of at least 40% to 50% of annual cash flow. The company’s capacity for buybacks is slightly above forecasted levels for 2025 and 2026, but potential headwinds from working capital and debt paydown could affect cash generation. The new US tax bill may offer some support by enabling lower cash tax liabilities. Overall, the Hold rating reflects a balanced view of the company’s bullish refining outlook against the backdrop of weaker seasonal industry dynamics.
Gabelman covers the Energy sector, focusing on stocks such as Equinor ASA, NextDecade, and Exxon Mobil. According to TipRanks, Gabelman has an average return of 8.4% and a 57.51% success rate on recommended stocks.