On Friday, Wells Fargo (NYSE:WFC) adjusted its price target for Marathon Petroleum (NYSE: NYSE:MPC) shares, reducing it from $223.00 to $196.00, while retaining an Overweight rating on the stock. The revision reflects an updated refining EBITDA multiple, which is part of the firm's financial analysis.
The firm's analyst noted that refining margin assumptions for all regions, including the Gulf Coast (GC), Mid-Continent (Mid-Con), and West Coast (WC), have been raised based on the latest market assumptions. This update is expected to impact the company's financial performance, as indicated by the revised quarterly and annual earnings per share (EPS) estimates.
For the second quarter of 2024, the new EPS estimate is set at $3.26, down from the previous estimate of $4.49. The full-year 2024 EPS forecast has also been adjusted to $15.41 from the earlier projection of $16.64. However, the EPS estimate for the year 2025 remains unchanged at $17.32.
The analyst emphasized that the company's throughputs, operating expenses, and corporate guidance remain consistent with previous forecasts. Additionally, the contribution from MPLX (NYSE:MPLX), Marathon Petroleum's master limited partnership, is expected to stay in line with the evaluations from the firm's MLP team.
The price target adjustment to $196.00 mirrors the recalibrated expectations for Marathon Petroleum's refining segment, taking into account the updated EBITDA multiple amidst current market conditions.
In other recent news, Marathon Petroleum's earnings and revenue forecasts have been a focal point for analysts. Citi, maintaining a neutral stance on the company, has projected an adjusted earnings per share (EPS) of $2.89 for the upcoming quarter, aligning with consensus estimates.
Meanwhile, Mizuho Securities has lowered Marathon Petroleum's price target from $201.00 to $198.00 due to anticipated shortfalls in earnings, free cash flow, and EPS for the second quarter of 2024, primarily attributed to lower refining margins.
Similarly, Piper Sandler has cut the company's shares target from $190.00 to $168.00, reflecting market dynamics and forward projections to the 2024/2025 fiscal years.
Marathon Petroleum's operations have also been influenced by recent market trends, with U.S. crude oil imports reaching a near two-year high in anticipation of the summer driving season.
Marathon Petroleum, along with other major refiners like Chevron (NYSE:CVX), Valero Energy (NYSE:VLO), and Phillips 66 (NYSE:PSX), has increased imports from countries such as Canada, Mexico, Guyana, and Colombia.
Furthermore, Marathon Petroleum's Galveston Bay refinery has experienced several shutdowns due to power outages caused by Hurricane Beryl, which is expected to impact third-quarter production.
The company is also involved in a lawsuit filed by Honolulu against major oil companies, alleging public misinformation about climate change risks linked to fossil fuels.
Lastly, Marathon Petroleum is undergoing a leadership transition, with Maryann T. Mannen, currently serving as the company's President, set to take over as Chief Executive Officer and join the Board of Directors on August 1, 2024.
InvestingPro Insights
Following Wells Fargo's price target adjustment for Marathon Petroleum, current InvestingPro data reveals a market capitalization of $57.88 billion, with a P/E ratio that stands at a competitive 8.06. Despite the downward revision in EPS estimates for Q2 and full-year 2024, the company has been recognized for its high shareholder yield and consistent dividend payments, having maintained them for 14 consecutive years. The company's stock also tends to exhibit low price volatility, which might appeal to investors seeking stability.
InvestingPro Tips highlight that management's aggressive share buybacks and the company's status as a prominent player in the Oil, Gas & Consumable Fuels industry could be factors underpinning its financial health. Additionally, with analysts predicting profitability for this year and the company having been profitable over the last twelve months, the outlook remains positive. For those interested in deeper analysis, there are additional tips available on InvestingPro, which can be accessed using the coupon code PRONEWS24 for up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
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