Goldman Sachs Highlights Valero's Lowest Costs, Gulf Coast Advantage, Sees EPS Soar To $12.50 By 2027

Goldman Sachs analyst Neil Mehta upgraded Valero Energy Corp VLO from Neutral to Buy rating with a price forecast of $154.

The analyst believes current consensus expectations better reflect concerns about oil product demand and tighter crude differentials.

The analyst estimates EPS to grow from around $7.50 this year to over $12.50 in 2027.

The bullish stance reflects share repurchases, limited refining capacity increases, and improving crude differentials from the returning OPEC+ supply.

While a hard landing for oil demand and the economy is a key risk, the analyst notes positive developments in China-U.S. trade relations as highlighted by GS Economics Research.

Also, Valero offers unique advantages such as lowest production cost, Gulf Coast exposure with a perceived crude/product advantage and ongoing capital returns supported by a near $5 billion cash balance, adds the analyst.

The analyst raised EPS estimates to $7.49 for 2025, $11.46 for 2026 and $12.67 for 2027, from the previous projections of $6.33, $9.84, and $11.30, respectively.

The analyst’s 2025 and 2026 EPS estimates are 12% and 10% above FactSet consensus, respectively.

Mehta is increasing the estimates to account for the strengthening underlying factors and now believes consensus estimates are unlikely to be revised downwards.

In April, the company reported first-quarter sales of $30.26 billion, beating the analyst consensus estimate of $28.68 billion and adjusted EPS of 89 cents, beating the consensus estimate of 42 cents.

VLO Price Action: VLO shares are up 4.42% at $136.26 at publication on Tuesday.

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