Stifel maintains Sunoco stock with $64 target, optimistic on earnings

On Tuesday, Stifel analysts upheld their positive stance on Sunoco shares (NYSE: SUN), maintaining a Buy rating and a $64.00 price target. Currently trading at $54.05, Sunoco appears undervalued according to InvestingPro analysis, with analyst targets ranging from $61 to $68. The research firm's update comes as they refine their financial model for the company, focusing on earnings projections and operational expenses. The adjustments aim to provide a more accurate representation of Sunoco's earnings timeline, particularly in the latter half of 2025.

Stifel's analysis indicates that while their fiscal year 2025 estimates for Sunoco have not significantly changed, the updated model now better captures the expected timing of the company's earnings. With a market capitalization of $7.3 billion and strong financial health metrics (InvestingPro rates the company's overall financial health as "GOOD"), the firm has also tweaked its cost per gallon (CPG) estimates and operational expense forecasts. These revisions are designed to more closely mirror the performance of Sunoco's fuel distribution segment, especially after the divestiture of its West Texas assets.

The analysts at Stifel have also factored in higher volumes anticipated for the second half of 2025. This projection aligns with the firm's expectations of Sunoco's earnings potential during that period, supported by the company's impressive 6.81% dividend yield and robust EBITDA of $1.31 billion. However, it's important to note that their current estimates do not include the potential impact of Sunoco's recent acquisitions of terminals in Germany and Poland. Discover more detailed analysis and metrics with a InvestingPro subscription, including exclusive ProTips and comprehensive financial health scores.

Stifel has indicated plans to incorporate the effects of these international acquisitions into their Sunoco model following the company's first-quarter earnings call in 2025. This forthcoming update will likely provide investors with a more comprehensive view of Sunoco's financial outlook, including the contributions from its expanded European operations.

Sunoco, known for its fuel distribution and marketing, remains a focal point for investors tracking the energy sector. With Stifel's reaffirmed Buy rating and price target, the firm signals confidence in Sunoco's ability to navigate the upcoming fiscal periods and capitalize on its strategic initiatives. The company maintains a healthy current ratio of 1.27 and has demonstrated solid revenue growth with a 5-year CAGR of 6%.

In other recent news, Sunoco has reported strong financial results for the fourth quarter of 2024, with adjusted EBITDA reaching $446 million and a full-year increase of 62% to $1.56 billion. The company has also confirmed its guidance for 2025, projecting an EBITDA range of $1.9 to $1.95 billion. Sunoco's acquisition of NuStar has been a significant growth driver, enhancing its distribution network and contributing to its financial achievements. Analysts have responded positively to these developments, with Mizuho (NYSE:MFG) Securities raising Sunoco's stock target to $68 while maintaining an Outperform rating, and Raymond (NSE:RYMD) James increasing their target to $67, also with an Outperform rating. RBC Capital Markets has kept its Outperform rating with a $64 target, acknowledging Sunoco's efficient execution and financial flexibility. Sunoco's recent €500 million acquisition of a European terminal has drawn investor interest, with expectations focused on return potential and contract capacity. The company is poised for continued growth, supported by its strong balance sheet and strategic approach to mergers and acquisitions.

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