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On Thursday, Mizuho (NYSE:MFG) Securities adjusted its outlook for Marathon Petroleum Corporation (NYSE:MPC), reducing the company's price target from $174.00 to $168.00 while maintaining a Neutral stock rating. According to InvestingPro data, the stock currently trades at $131.42, with analysts' targets ranging from $141 to $185, suggesting potential upside despite recent downgrades. The adjustment follows Mizuho's anticipation of Marathon Petroleum's first-quarter earnings potentially falling short of market expectations. Analysts at Mizuho forecast a first-quarter earnings per share (EPS) of negative $0.34, contrasting with the consensus estimate of $0.00. They noted that consensus estimates have not yet fully accounted for the quarter's end and have been on a downward trend. The company is scheduled to report earnings on May 6, with InvestingPro data showing 10 analysts have recently revised their earnings estimates downward.
Mizuho analysts believe that while refining margins showed sequential improvement, it was likely negated by lower capture rates. Additionally, the midstream segment is expected to have performed slightly weaker in comparison to the previous quarter. The renewable diesel sector remains an unpredictable element, largely due to uncertainties surrounding the Production Tax Credit ( PTC (NASDAQ:PTC)).
The decision to revise the price target was based on a roll-over of Mizuho's model, which now incorporates lower near-term margin assumptions. Despite the downward revision in the price target, Mizuho has chosen to maintain a Neutral rating on Marathon Petroleum's stock. This decision reflects broader macroeconomic trends in the refining industry and growing uncertainties regarding global economic growth. Moreover, Mizuho pointed out that Marathon Petroleum's assets in the Petroleum Administration for Defense District 2 (PADD 2) are affected by tighter Western Canadian Select (WCS) spreads. Despite these challenges, InvestingPro analysis indicates the company maintains a GOOD financial health score, with strong dividend history spanning 15 consecutive years and active share buyback programs. Get access to the full Marathon Petroleum Pro Research Report and discover 12 additional exclusive ProTips for deeper insights into the company's performance and outlook.
In other recent news, Marathon Petroleum Corp. reported fourth-quarter earnings that exceeded analyst expectations. The company posted an adjusted earnings per share of $0.77, surpassing the consensus estimate of $0.62. Revenue for the quarter was $33.47 billion, slightly above the expected $33.23 billion, although it marked a 14.5% decline from the previous year. Net income attributable to Marathon Petroleum was $371 million, down from $1.5 billion in the fourth quarter of 2023. Additionally, the company generated net cash from operations totaling $8.7 billion in 2024, facilitating substantial capital returns to shareholders.
Marathon Petroleum also formalized an underwriting agreement with major financial institutions, including Wells Fargo (NYSE:WFC) Securities and Citigroup (NYSE:C) Global Markets. This agreement is part of a broader financial strategy, as indicated by a Tenth Supplemental Indenture with The Bank of New York Mellon (NYSE:BK) Trust Company. The specific terms of the new notes, such as interest rates and maturity dates, have not been disclosed. Furthermore, the company is advancing its Midstream Gulf Coast NGL strategy, with plans for a fractionation complex and export terminal through its MPLX (NYSE:MPLX) subsidiary.
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