Zacks Investment Research downgraded shares of Marathon Petroleum Corporation (MPC) from NEUTRAL to UNDERPERFORM on October 24, 2013, with a target price of $66.00.
With refining margins under pressure on the back of high input (oil) costs, we are downgrading Marathon Petroleum shares to Underperform from Neutral. Moreover, in an effort to tighten fuel emission norms, the EPA has recently proposed new gasoline standards, asking refiners to curb sulfur content in gasoline by 67% starting from 2017. Complying with the new rules is expected to push up capital expenditures for downstream operators like Marathon. Finally, 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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