Zacks Investment Research downgraded shares of Marathon Petroleum Corporation (MPC) from OUTPERFORM to NEUTRAL on December 19, 2012, with a target price of $66.00.
We are downgrading shares of Marathon Petroleum to Neutral from Outperform purely on valuation grounds, as we see limited near term price upside. We continue to like Marathon for its scale advantage, impressive asset quality, and an extensive midstream/retail network. We believe management's recently commenced $2 billion share repurchase program and the proposed acquisition of BP's Texas City refinery could further boost shareholder value. However, we think the current valuation is fair and adequately reflects the company's future growth prospects. Moreover, Marathon's core business – refining – is faced with a high degree of volatility, while being capital intensive. This is expected to limit its ability to generate positive earnings surprises. As a result, our long-term total return expectation for Marathon remains muted.
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