Wells Fargo Upgrades Phillips 66 (PSX) to Outperform; Downgrades Western Refining (WNR) to Market Perform

Wells Fargo upgraded Phillips 66 (NYSE: PSX) from Market Perform to Outperform and adjusted its valuation range to $58-$68 from $64-$67, while downgrading Western Refining (NYSE: WNR) from Outperform to Market Perform and moving the valuation range to $26-$30 from $41-$43.

The calls were part of a larger call on the refining sector as the firm shifts their approach to refining valuation to 2015 EPS estimates and cash flows generated in the interim. Based on the significant narrowing of the Brent/WTI differential and a narrower light/heavy spread likely to start in Q3 2013, they are lowering 2013 EPS estimates across the refining sector. With one exception (ALJ's 2014 EPS estimate has increased) they are also lowering 2014 EPS estimates. For 2015, they have reduced EPS estimates for all refiners. They have also lowered the valuation range of every independent refiner as they have shifted their valuation basis to 2015.

The firm continues to recommend Marathon Petroleum (NYSE: MPC), Tesoro (NYSE: TSO) and Valero Energy (NYSE: VLO) as their favorite refiners.

For an analyst ratings summary and ratings history on Phillips 66 click here. For more ratings news on Phillips 66 click here.

Shares of Phillips 66 closed at $57.24 yesterday.

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