On Wednesday, analyst firm Credit Suisse raised its price target for Tesoro to $130 from $125, maintaining its "outperform" rating on the oil refinery company.
Credit Suisse analysts' price target and rating are "based on a DCF analysis of the different sub segments as well as a sum of the parts analysis. We base our valuation and relative ratings for refiners primarily on EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortization) multiples," the firm said in a note.
The analyst firm believes Tesoro is "very levered to West Coast refining margins and other niche areas which are more difficult to track."
Oil has been a dreadful place to add names, a literal burial ground of capital. Most names are in a vicious bear market, falling 20% or more. But as we look around the landscape, the refiners are a group that has some leverage even with lower crude prices.
Tesoro is such a name, surprisingly within 10% of all-time highs. The move on Wednesday was very impressive with big volume and price action. The Relative Strength Index shows good strength vs. the market, and a new Moving Average Convergence Divergence buy signal has been confirmed. Resistance is at the gap ahead but new highs could be seen above $105.
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