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Investing.com - Wolfe Research downgraded Valero Energy (NYSE:VLO) from Outperform to Peerperform on Monday, citing valuation concerns after the stock’s strong year-to-date performance of nearly 27%. According to InvestingPro data, the stock’s RSI indicates overbought territory, with shares trading near their 52-week high of $167.78.
The downgrade comes as part of Wolfe Research’s broader move to lower its rating on the U.S. refining sector from Overweight to Market Weight, following a strong margin recovery that has largely met the firm’s expectations.
Valero shares have outperformed the S&P by 18% year-to-date, including a 45% rebound from recent lows, bringing the stock within 5% of what Wolfe Research considers fair value.
The research firm noted that Valero’s cost advantage is no longer materially mispriced compared to its peers, suggesting limited upside potential from current levels.
Wolfe Research indicated that further appreciation would require "another upward reset in mid-cycle margins" similar to the post-COVID "Regional Golden Age" of 2022-23, which the firm believes lacks visibility at this time.
In other recent news, Valero Energy Corporation has seen several notable developments. Goldman Sachs upgraded Valero’s stock rating from Neutral to Buy and raised its price target to $154, citing a positive outlook on earnings potential and improved crude differentials. Wells Fargo (NYSE:WFC) also increased its price target for Valero to $168, maintaining an Overweight rating, while UBS raised its target to $164, continuing a Buy rating. These adjustments reflect strong refining performance and expectations of improved utilization and capture rates in the coming quarters.
Evercore ISI initiated coverage on Valero with an In Line rating and a $135 price target, acknowledging the company’s operational strengths and competitive position. The firm projects resilient demand for transportation fuels into the 2030s, despite concerns about long-term demand. Valero also announced changes following its annual stockholders’ meeting, including the retirement of director Robert A. Profusek and the re-election of non-employee directors. Stockholders approved the 2024 compensation for Valero’s named executive officers and ratified KPMG LLP as the independent registered public accounting firm for 2025.
These recent developments highlight Valero’s strategic positioning and ongoing efforts to deliver shareholder value.
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