Time to Buy the Refiners, Howard Weil Says

The refiners have been beat up, they’ve been thrown out, but they’re not down–at least not today.

REUTERS

Shares of refining companies are on the move today after brokerage firm Howard Weil released a positive note on the sector today. Analysts Blake Fernandez and Richard Roberts explain their reasons for optimism:

We have patiently waited for equity prices to fully digest downward 3Q revisions. Initial indications were that numbers needed to move lower, but the magnitude has taken both buy side and sell side by surprise. The Chevron (CVX) interim update citing weak downstream performance in 3Q should be the final communication the Street needs to fully digest a weak quarter…

After being on the sidelines for the bulk of this year, we feel the relative underperformance in the refining group provides an opportunity to start nibbling. Those feeling they had missed their opportunity to participate in the US energy renaissance may have another shot.

Fernandez and Roberts singled out three stocks for upgrades. Holly and Valero were upgraded to Sector Outperform from Sector Perform, while Marathon was made a Focus Stock.

Shares of Holly (HFC) have gained 1.9% to $43.29 at 10:43 a.m., shares of Marathon (MPC) have risen 1.8% to $68.41, and shares of Valero Energy (VLO) have ticked up 0.6% to $36.77. Tesoro (TSO) has dropped 0.8% to $45.21.