U.S. stocks edge higher; solid earnings season continues
Investing.com - Mizuho (NYSE:MFG) has reduced its price target on Sunoco (NYSE:SUN) to $67.00 from $68.00 while maintaining an Outperform rating on Monday. Currently trading at $53.53, with a market capitalization of $7.3 billion and an attractive 6.71% dividend yield, InvestingPro analysis suggests the stock is slightly undervalued.
The adjustment comes as Mizuho now assumes a September 30 closing date for Sunoco’s TanQuid acquisition, slightly later than previously anticipated, along with adjustments to fuel margin expectations.
Mizuho noted that little has changed regarding Sunoco’s legacy business outlook, with expectations for strong volume growth in fuel distribution during the second half of 2025 and consistent contributions from pipeline systems and terminals operations.
The firm highlighted that Sunoco’s planned acquisition of Parkland offers considerable benefits, including financial accretion, achievable synergies, increased scale, and diversification, despite the stock’s underperformance since April.
Mizuho expects updates on both the Parkland and TanQuid acquisitions to be a central focus of Sunoco’s second-quarter 2025 commentary and investor questions as stakeholders seek more comprehensive information about integration plans.
In other recent news, Sunoco LP has made significant financial maneuvers related to its pending acquisition of Parkland Corporation. The company amended its existing credit agreement, extending the maturity date and increasing the revolving loan commitments, contingent on the closing of the Parkland acquisition. This amendment also allows for additional revolving loan commitments or term loans and increases the swingline sublimit, with the ability to borrow in Canadian Dollars. The acquisition is structured to provide a 25% premium to Parkland shareholders, with options for cash or SunocoCorp common units, and aims for annual run-rate synergies of US$250 million by the third year post-closing. Additionally, Jefferies adjusted its price target for Sunoco shares to $6.00 from $7.00, maintaining a Hold rating, amid legislative discussions that could impact Sunoco’s operations. The company has also modified the terms of its arrangement agreement with Parkland, reflecting adjustments to funding mechanics while maintaining other material terms. These developments indicate Sunoco’s strategic financial planning and operational adjustments as it integrates Parkland’s operations.
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