TD Cowen analyst Jason Gabelman maintained a Buy rating on Valero Energy (VLO – Research Report) today and set a price target of $118.00.
Jason Gabelman has given his Buy rating due to a combination of factors that reflect both the current operational challenges and the long-term potential of Valero Energy. Despite a weaker operational quarter, with throughput at the lower end of guidance and higher-than-expected operating expenses, the company has maintained its buyback strategy, which aligns with investor expectations. The decision to close the Benicia facility in 2026 will result in higher depreciation, but the company does not foresee a decline in demand, which supports a positive outlook.
Furthermore, while the price target has been reduced to $118, this adjustment reflects an updated valuation based on free cash flow projections, considering 2026 as a terminal year. Valero’s stock is trading at a multiple that suggests potential upside compared to its historical valuation averages. The company’s guidance for the second quarter indicates a busy turnaround period, yet the strategic focus on maintaining a strong cash balance and repurchase yield underscores its commitment to delivering shareholder value.
In another report released today, Morgan Stanley also maintained a Buy rating on the stock with a $145.00 price target.