Deutsche Bank initiated coverage of Marathon Petroleum Corp. MPC on Wednesday with a Buy Rating and price target of $103.
Analysts Ryan Todd and Igor Grinman called Marathon a “top pick” and that it “offers one of the most balanced investment cases in our coverage universe, driven by 1) high quality assets levered to a recovery in PADD II/III crude differentials 2) attractive growth investments support 18 percent growth in EBITDA through 2016, even in a flat margin environment, and 3) peer-leading cash return to shareholders.”
Risks to the company include “1) the removal of the crude export ban which would pressure domestic crude differentials, 2) an oversupply of gasoline in the Gulf/MidCon given the continued high utilization growth in runs of light sweet crude (which yield more gasoline) for the industry as a whole, and 3) any wane in product export demand.”
The analyst report concluded that there is “potential for an incremental ~$900MM in annual EBITDA vs our estimate from a series of projects underway at MPC in 2014-2016, or an estimated 13 percent increase vs. our 2016 EBITDA estimate.”
Marathon Petroleum Corp. recently traded at $83.83, down 0.51 percent.
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