Oil refiner and marketer Valero Energy Corporation ( VLO ) on Monday caught a big downgrade from analysts at The Benchmark Company.
The firm said it cut its rating on VLO from "Buy" to "Hold" with a $23 price target, suggesting a tiny upside to the stock's Friday closing price of $22.56.
A Benchmark analyst commented, "Shares downgraded to HOLD on less favorable mid-cycle earnings assessment which suggests a fair value roughly equal to the current share price…Fourth quarter earnings expected to be significantly below current consensus estimates…Weaker 2012 and mid-cycle earnings outlook reflects our expectation of narrower heavy crude price discounts….Downside risk in shares is limited by anticipated 2012 share buybacks and more favorable economics on recently acquired Pembroke and Meraux refineries."
Valero shares rose 39 cents, or +1.7%, in premarket trading Monday.
The Bottom Line
Shares of Valero Energy ( VLO ) have a 2.66% dividend yield, based on Friday's closing stock price of $22.56. The stock has technical support in the $18-$20 price area. If the shares can firm up, we see overhead resistance around the $26-$27 price levels.
Valero Energy Corporation ( VLO ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.
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