Benzinga - UBS analyst Manav Gupta initiated coverage of Marathon Petroleum Corp (NYSE: MPC) with a Buy rating and price target of $165.
Gupta's report comes on the heels of Marathon's acquiring a 49.9% stake in renewable natural gas producer LF Bioenergy for $50 million.
Over the past couple of years, the company has paid out $19.3 billion to shareholders, the highest among independent refiners, and is likely to return around $20.4 billion to shareholders over 2023-2026, Gupta explained.
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Marathon is likely to meet its full dividend obligation without the refining segment making any contribution to free cash flows.
“We model post dividend FCF of $8.37Bn and $5.70Bn for 2023 and 2024, respectively, allowing aggressive buybacks to continue,” Gupta said.
Gupta praised the current management team for shifting Marathon's focus to improving commercial operations, making all assets cost-competitive, operating assets with higher reliability and rewarding its shareholders.
“The sale of Speedway and sharing proceeds with shareholders, closing weaker refining assets (Martinez & Gallup), materially lowering refining opex, growing midstream business distribution, which fully covers the dividend, and the Neste JV to grow the renewables business are some of the achievements of the new management team,” Gupta added.
MPC Price Action: Shares of Marathon Petroleum had risen by 2.24% to $130.74 at the time of publication Thursday.
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