Deutsche Bank Downgrades Tesoro Corporation (TSO) to Hold

Deutsche Bank downgraded Tesoro Corporation (NYSE: TSO) from Buy to Hold with a price target of $128.00 (from $131.00). Analyst Ryan Todd noted rising capex was squeezing potential FCF.

"Refiners are in a delicate balancing act, as the transition towards a more balanced cash flow mix (ie. increased midstream/marketing) promises long-term value, but requires spend that reduces near-term cash to shareholders (see MPC, PSX). While the increase to marketing capex/EBITDA was expected (and positive), and the broad outlook remains constructive, significant hikes to TSO capex (2-yr maintenance + growth capex +60% vs. 2014 guide), subsequent reductions to 2016 FCF yield outlook (7.7% in 2016 vs. ~10% prior and 11.3% peer average) and outperformance (+20% relative to peers YTD) have reduced upside from here. PT from $131 to $128," said Todd.

For an analyst ratings summary and ratings history on Tesoro Corporation click here. For more ratings news on Tesoro Corporation click here.

Shares of Tesoro Corporation closed at $107.77 yesterday.

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