UPDATE - UBS Initiates Coverage on Tesoro (TSO); Stuck in Neutral
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Price: $99.53 --0%
Rating Summary:
17 Buy, 3 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
17 Buy, 3 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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UPDATE - UBS initiates coverage on Tesoro Corporation (NYSE: TSO) with a Neutral rating. PT $23.
UBS analyst says, "Tesoro offers significant exposure to West Coast refining margins - TSO’s 550 MBbld of refining capacity in PADD 5 of the U.S. ranks as the second largest West Coast refining footprint behind Chevron (NYSE: CVX). Given its heavy exposure to the California market, its chal lenging regulatory climate, and high unemployment rate, we expect TSO shares to recover more slowly than Mid Continent or Gulf Coast refining peers.
"Operational strategy remains a “show me” story - TSO’s operational strategy is centered on the reinvestment of $320MM over the next 3 years into improvement projects designed to boost EBITDA by $380-$410MM. The average project will cost $1MM and have a payback period of less than 2 years. We estimate that any detect able improvements will likely be born gradually, making results difficult to discern. We believe the onus lies with TSO’s ability to prove it can execute its plan before investors award it significant credit."
UBS analyst says, "Tesoro offers significant exposure to West Coast refining margins - TSO’s 550 MBbld of refining capacity in PADD 5 of the U.S. ranks as the second largest West Coast refining footprint behind Chevron (NYSE: CVX). Given its heavy exposure to the California market, its chal lenging regulatory climate, and high unemployment rate, we expect TSO shares to recover more slowly than Mid Continent or Gulf Coast refining peers.
"Operational strategy remains a “show me” story - TSO’s operational strategy is centered on the reinvestment of $320MM over the next 3 years into improvement projects designed to boost EBITDA by $380-$410MM. The average project will cost $1MM and have a payback period of less than 2 years. We estimate that any detect able improvements will likely be born gradually, making results difficult to discern. We believe the onus lies with TSO’s ability to prove it can execute its plan before investors award it significant credit."
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