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On Monday, BMO Capital Markets maintained a positive stance on Valero Energy Corporation (NYSE:VLO), reaffirming an Outperform rating and a $145.00 price target for the company's stock. The endorsement comes after a meeting with Valero's management team last Friday, which took place against the backdrop of a volatile market environment marked by tariffs and concerns over global economic growth. With the stock currently trading at $105.20, near its 52-week low of $102.60, InvestingPro analysis suggests Valero is undervalued, aligning with BMO's bullish outlook.
According to BMO analyst Phillip Jungwirth, despite the broader market correction and increased uncertainty, Valero Energy is well positioned to navigate the challenges. Jungwirth highlighted the company's advantages, including its position at the lower end of the cost curve, its ability to flexibly manage feedstock, its consistent operational performance, its strong balance sheet, and its history of delivering returns to shareholders. This assessment is supported by the company's impressive 37-year streak of consecutive dividend payments, currently yielding 4.32%, and a healthy current ratio of 1.53.
The analyst's comments also included a preview of Valero's first-quarter results for 2025, revisions to the company's estimates for 2025-26, and the introduction of new target prices in their energy sector coverage. These updates are part of BMO's broader energy preview, which takes into account the current economic headwinds and their potential impact on the sector.
Valero Energy, recognized for its refining operations, has been identified by BMO as the top pick among its peers in the refining industry. The company's strategic positioning and financial prudence have been noted as key factors that could help it withstand the pressures of the current economic climate.
Investors and market watchers will likely keep a close eye on Valero's upcoming quarterly financial report, scheduled for April 24, to see if the company's performance aligns with BMO's positive outlook and to assess the impact of the turbulent market conditions on its business. For deeper insights into Valero's financial health and growth prospects, InvestingPro subscribers can access comprehensive analysis, including 14 additional ProTips and detailed valuation metrics in the Pro Research Report.
In other recent news, Valero Energy Corporation reported its fourth-quarter 2024 earnings, surpassing Wall Street expectations with an earnings per share (EPS) of $0.64, compared to the forecasted $0.43. The company's revenue also exceeded projections, reaching $30.76 billion against the anticipated $30.36 billion. Despite this positive performance, analysts from Mizuho (NYSE:MFG) expect Valero's first-quarter earnings to fall short of market expectations, particularly in the renewable diesel segment. Mizuho maintained its Outperform rating on Valero with a price target of $158, citing the company's strong refining segment and robust balance sheet.
UBS also reaffirmed a Buy rating on Valero, with a price target of $160, despite revising down its first-quarter 2025 EPS estimate to $0.58 from $1.33. UBS expects Valero's refining and marketing earnings to improve in the second quarter of 2025, with positive influences from regional supply and demand dynamics. Additionally, Valero has issued $650 million in senior notes due in 2030, a strategic financial move aimed at managing its capital structure. These developments highlight Valero's ongoing efforts to navigate market challenges while maintaining investor confidence.
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