Zacks Investment Research downgraded shares of Tesoro Corporation (TSO) from OUTPERFORM to NEUTRAL on April 11, 2013, with a target price of $57.00.
Concerned by EPA's proposed new gasoline standards, we are downgrading Tesoro Corporation shares to Neutral from Outperform. In an effort to tighten fuel emission norms, the environmental watchdog has asked refiners to curb sulfur content in gasoline by 67% starting from 2017. Compliance with the new rules is expected to push up capital expenditures for downstream operators like Tesoro. The company is also faced with volatile industry fundamentals and limited geographic diversification, which may further limit its ability to generate positive earnings surprises. Partially offsetting these negatives are the scale and diversification benefits afforded by Tesoro's portfolio of seven refineries, benefits from the impending acquisition of BP's Southern California refinery and a shareholder friendly financial policy.
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