Suvro Sarkar, an analyst from DBS, maintained the Buy rating on Valero Energy (VLO – Research Report). The associated price target is $150.00.
Suvro Sarkar has given his Buy rating due to a combination of factors that highlight Valero Energy’s strategic advantages and growth potential. The company’s strong presence in the US Gulf Coast, which is a key refining hub, allows it to leverage sourcing flexibility and optimize product yields to capture higher margins. This geographic advantage, coupled with the ability to process diverse feedstock, positions Valero as a significant player in the region.
Sarkar also points to Valero’s expansion in the renewable fuels sector as a critical factor in his recommendation. The company is increasing its capacity for renewable diesel and sustainable aviation fuel, which are expected to contribute significantly to earnings from 2025 onwards. These products typically offer higher margins than traditional petroleum-based fuels, enhancing Valero’s profitability. Additionally, Valero’s low operating costs and attractive valuation metrics, such as a competitive forward price-to-book ratio and a solid dividend yield, make it an appealing investment. The potential for geopolitical tensions to impact supply further underscores the attractiveness of Valero’s stock at current levels.
In another report released on March 14, Barclays also maintained a Buy rating on the stock with a $140.00 price target.