Recent moves by oil refiner Tesoro Corp. (TSO) have strengthened Zacks senior energy analyst Sheraz Mian's outlook on the shares. The following is from his latest Buy report:
Our recommendation remains unchanged, though we have raised our estimates and price objective and given effect to the recent 2-for-1 stock split. We continue to like Tesoro for its strong portfolio of West Coast-focused refining assets, which has been further strengthened by the recent accretive acquisition of Shell's Wilmington refinery.
The unit's integration process is on track and company remains confident in its target of $100 million in synergies. Tesoro plans to eventually increase the unit's capacity through investments over the next few years.
We have always liked this name and the feeling has only increased with this transaction. We have raised our price objective to $68 from a split-adjusted $62.5, which we determine using a 2007 P/E [price-to-earnings] multiple of 9.1x. We believe that Tesoro is better positioned than most of its peers in the current environment given the positive margin outlook for its core West Coast market.
Read the analyst report on TSO
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