Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe


U.S. Petroleum Firm Positioned to 'Drive Growth and Value'
Research Report

Share on Stocktwits


The company's robust Q4/19 and outlook for this year are addressed in a Raymond James report.

In a Jan. 29 research note, Raymond James analyst Justin Jenkins reported that Marathon Petroleum Corp.'s (MPC:NYSE) Q4/19 was a beat and its current "risk/reward still remains positive."

Jenkins reviewed the downstream energy company's "very strong Q4/19 performance" in which it "easily beat" consensus and Raymond James' earnings per share (EPS) estimates. Marathon's adjusted EPS came in at $1.56, versus forecasts of $0.80 and $0.85 by Raymond James and the Street, respectively. EBITDA was $3.2 billion, also above Raymond James' $2.2 billion projection.

With respect to Q4/19, the analyst explained that "the solid upside was driven by better all-in refining performance (margins/throughput/costs) coupled with some modest retail upside but partially offset by a slight miss in midstream and higher-than-modeled corporate costs."

Another positive that Jenkins pointed out is management guided to 2020 capex of about $4.35 billion, which is lower than the roughly $5 billion estimate of both Raymond James and consensus. Plus, Marathon expects capex to drop even more in 2021, "enough so that it expects to generate solid excess free cash flow."

Also of note, management continues to optimize high sulfur fuel oil between plants and import additional heavy sulfur fuel as feedstocks to fill its cokers, both in anticipation of the sulfur penalty it is likely to be hit with from IMO 2020. The company is benefiting, too, from exports of vacuum gas oil along the Gulf Coast, the analyst noted.

The energy firm intends to provide an update regarding its midstream strategic review and its CEO search by the end of Q1/20 and carry out the Speedway spinoff by early Q4/20.

Jenkins concluded, "We remain of the view that Marathon Petroleum can further optimize its industry-leading refining position while driving growth and value in the retail/midstream segments. While not without headwinds (e.g.,) macro volatility, Q1/20 maintenance, we believe the company is set to benefit from robust overall cash generation, while further optimization actions beget value creation."

Thus, Raymond James has a Strong Buy rating and $75 per share target price on Marathon Petroleum, whose current share price is about $55.02.


1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Raymond James, Marathon Petroleum Corp., January 29, 2020


Analyst Holdings and Compensation: Equity analysts and their staffs at Raymond James are compensated based on a salary and bonus system. Several factors enter into the bonus determination including quality and performance of research product, the analyst's success in rating stocks versus an industry index, and support effectiveness to trading and the retail and institutional sales forces. Other factors may include but are not limited to: overall ratings from internal (other than investment banking) or external parties and the general productivity and revenue generated in covered stocks.

The analyst Justin Jenkins, primarily responsible for the preparation of this research report, attest to the following: (1) that the views and opinions rendered in this research report reflect his or her personal views about the subject companies or issuers and that no part of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views in this research report. In addition, said analyst(s) has not received compensation from any subject company in the last 12 months.

Certain affiliates of the RJ Group expect to receive or intend to seek compensation for investment banking services from all companies under research coverage within the next three months.
Raymond James & Associates received non-investment banking securities-related compensation from Marathon Petroleum Corporation within the past 12 months.v Raymond James & Associates, Inc. makes a market in the shares of Marathon Petroleum Corporation and MPLX L.P.

Additional Risk and Disclosure information, as well as more information on the Raymond James rating system and suitability categories, is available here.

Want to read more about Oil & Gas - Services investment ideas?
Get Our Streetwise Reports Newsletter Free and be the first to know!

A valid email address is required to subscribe