We maintain our long-term Outperform recommendation on Tesoro Corporation (TSO) following a stellar second quarter 2011 performance. Higher throughput, improved margin environment and efficient operational performance aided the company to beat our earnings per share and revenue projections.
We believe that the favorable trends in the refining industry coupled with improvement in overseas economic activity and prospects for stronger fuel demand in the domestic market will enable the company to attain a competitive edge against its peers in the coming months. Furthermore, Tesoro's strategic actions — to upgrade crude oil supply and cost saving initiatives — will drive the company's profitable growth and boost its stock valuation.
As such, we rate Tesoro shares as an attractive investment and continue to rate it as Outperform. Our $25 price objective reflects a 2011 P/E multiple of 6.4x.
TESORO CORP (TSO): Free Stock Analysis Report
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