The Analysts Shift Attention To The Refiners
The analysts have been bullish on the energy sector (NYSEARCA: XLE) for the last two years and nothing about that has changed. The global supply/demand situation has oil prices trading at the highest levels in a decade and moving higher in the near term at least. What has changed is that crude supplies are building while supplies of refined products are slipping which has the refiners set up to outperform within a sector that is expected to lead the broad market in Q1. The bottom line is that energy is going to dominate the good news this earnings reporting cycle and it looks like the refiners are the hot stocks within the sector analysts are moving into.
Phillips 66 Gets Price Target Increase From Piper Sandler
Piper Sandler raised its price target on Phillips 66 (NYSE: PSX) to $119 setting the new high price target among the analysts. The target is more than 43% above the previous week’s closing price and only the latest in a string of upgrades and price target increases over the last year. Piper Sandler did not issue a rating on the stock but the Pricetargets.com consensus of 13 analysts is a firm Buy and that has held steady over the past year. The consensus price target is only $97.25, however, but is trending higher in the 12, 3, and 1-month comparisons.
Phillips 66 is a high-yielding dividend payer as well. The stock yields about 4.45% with shares trading near $83 and the trend in the distribution level is up. The company has only increased the payout once since the pandemic began but has only ever increased the payout. The payout ratio is a little high at 63% but not a worry due to cash flow and the expectation for earnings strength.
Valero Gets Double Boost Ahead Of Earnings
Valero Energy (NYSE: VLO) got a double price target boost to start the week including one from Piper Sandler. Piper Sandler again issued no rating on the stock but raised the price target to $121 from the previous $95 which is a 20% premium to the broad consensus. The Piper target is not the high price target, that was set by Morgan Stanley at $125. The consensus price target, notably, has been trailing the market and is still slightly below the current price action. The consensus price target is trending higher however and is up in the 12, 3, and 1-month comparisons.
Valero Energy doesn’t yield quite as much as Philips 66 but it is still a high-yielding stock at 3.74%. The payout ratio is more comfortable, however, at roughly 44% of this year’s earnings outlook and the outlook for earnings is on the rise. The company has not raised the dividend since the pandemic began but we think it is on track to make an increase this fiscal year.
PBF Energy Inc, Is About To Reinstate The Dividend
PBF Energy (NYSE: PBF) cut its distribution when the pandemic began and has not brought it back yet. Based on the outlook for earnings and the analyst's interest we think it could come back within the next few quarters. If the company were to reinstate the payout it would yield about 1.1%. That said, the analysts only rate the stock a firm Hold but the sentiment is shifting. Three analysts came out to start the week with price target increases or rating changes that have the consensus price target up in all three timeframes and nearly double from last year. Those three analysts have the stock pegged at Buy with a price target in the low to mid $30’s or about 20% to 25% above the recent price action.
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