Mizuho Securities Starts Sunoco (SUN) at Neutral
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Mizuho Securities initiates coverage on Sunoco (NYSE: SUN) with a Neutral rating and a price target of $31.00.
Analyst Brian Zarahn commented, "We are initiating coverage of SUN with a Neutral rating and $31 price target. Our price target is based on the average of our $35 discounted cash flow model (10.75% discount rate) and $27 EV/EBITDA (11x multiple on 2017) valuation methodologies. SUN offers a healthy 11% yield and exposure to relatively stable wholesale and retail fuels distribution. Our rating is driven by high leverage from acquisitions and muted distribution growth over the next few years. That being said, we do not expect the distribution to be reduced. So for patient, income-oriented investors, SUN provides a double-digit yield."
Shares of Sunoco closed at $29.18 yesterday.
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