Marathon Petroleum (MPC) Could Buy Back Up to 40% of its Shares Post Speedway Transaction - Morgan Stanley
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Morgan Stanley analyst Benny Wong reiterated an Overweight rating and $52.00 price target on Marathon Petroleum (NYSE: MPC) after the company MPC reported adj. EPS of $(0.94) vs. Consensus of $(1.41) The headline EPS of $0.29 was adjusted for $851 MM in net pre-tax special
adjustments. EPS upside can be attributed to better contribution from refining (gross margin of $6.11/bbl and opex of $12.90/bbl) and Speedway (fuel margin of $0.29/gal). This was partially offset by a lower than expected income tax benefit ($100 MM). Capex in the quarter was largely in line with consensus at $491 MM. As of December 31, MPC had available liquidity of ~$7.3 Bn, including $540 MM in cash and the remainder in available credit. The $21 Bn Speedway sale remains
targeted to close by the end of 1Q21 with MPC reiterating its commitment to use the proceeds to strengthen the balance sheet and return capital to shareholders.
As the environment stabilizes and the Speedway transaction concludes, structural changes are likely with the analyst stating "After right-sizing the balance sheet, MPC could buy up to 25-40% of its outstanding shares."
Shares of Marathon Petroleum closed at $45.15 yesterday.
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