Zacks Investment Research upgraded shares of Marathon Petroleum Corporation (MPC) from UNDERPERFORM to NEUTRAL on January 08, 2014, with a target price of $93.00.
Despite weak third quarter results, we are upgrading Marathon Petroleum shares to Neutral from Underperform. We like Marathon for its scale advantage, impressive asset quality and an extensive midstream/retail network. We believe management's steady dividend increases, the ongoing share repurchase program and the recent 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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