NEW YORK (TheStreet) -- Shares of Tesoro Corp. (TSO) are down 3.12% to $74.53 today as oil dropped to a five-year low after OPEC said it expects demand for its crude next year to be the lowest since 2003, although analysts reiterated positive ratings following guidance at the company's Investor Day yesterday.
Barclays analysts said San Antonio, TX-based petroleum refiner Tesoro is "on track to exceed original 2014 improvement targets," reiterating their "overweight" rating and raising their price target to $114 from $104.
"Management now expects to recognize $505 to $565 million in incremental EBITDA relative to 2013, compared to previous guidance of $370 to $430 million. In addition, TSO guided 2015 y/y incremental improvement to $550 to $670 million ... including expected y/y Tesoro Logistics (TLLP) growth of $325 to $375 million," Barclays analysts added.
Bank of America analyst Doug Leggate also reiterated a "buy" rating today on Tesoro and raised the price target to $88 from $70, saying that "Tesoro's analyst review combined for the first time the strategy update from TLLP, underlining the extent to which Tesoro's outlook and investment case is increasingly linked to the outlook its midstream expansion."
Similarly, Credit Suisse analyst Edward Westlake reiterated an "outperform" rating on the stock and raised the price target to $100 from $86, saying that "self-help" is driving upside.
The Organization of Petroleum Exporting Countries lowered its projection for 2015 by about 300,000 barrels a day, to 28.9 million a day, pushing the entire energy sector lower today.
Separately, TheStreet Ratings team rates TESORO CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate TESORO CORP (TSO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, attractive valuation levels, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 565.21% and other important driving factors, this stock has surged by 39.96% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TSO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 300.0% when compared to the same quarter one year prior, rising from $99.00 million to $396.00 million.
- The debt-to-equity ratio is somewhat low, currently at 0.64, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.85 is somewhat weak and could be cause for future problems.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TESORO CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- You can view the full analysis from the report here: TSO Ratings Report