Valero Energy: Wolfe Research Downgrades to Peer Perform from Outperform

Valero Energy: Wolfe Research Downgrades to Peer Perform from Outperform

Valero Energy Corporation (VLO) has faced a significant adjustment in its analyst recommendation, with Wolfe Research revising its stance from 'Outperform' to 'Peer Perform' [1]. The decision comes on the heels of the stock's recent robust performance, prompting Wolfe Research to reassess its valuation concerns. Notably, the firm did not provide a specific price target alongside the downgrade, emphasizing its cautious outlook on the stock's future prospects.

Analyst Forecasts and Recommendations

Analysts have provided a diverse range of forecasts for Valero Energy. Based on 17 analysts' one-year price targets, the average target price for VLO stands at $151.38, with a high estimate of $186.00 and a low estimate of $118.00 [1]. The consensus recommendation from 21 brokerage firms places VLO in an 'Outperform' status, indicating a majority sentiment of buying the stock [1]. However, the GuruFocus estimate for VLO suggests a downside of 23.44% from the current price of $153.05 [1].

MarketBeat calculates a consensus rating of 'Moderate Buy' for Valero Energy, based on 15 analysts' ratings [3]. The average price target from these analysts is $174.00, representing a forecasted upside of 17.12% from the current price of $148.56 [3].

Recent Performance and Earnings Outlook

Valero Energy closed the most recent trading day at $153.05, down 1.14% from the previous session, trailing the broader market indices [2]. Over the past month, the stock has gained 15.96%, outperforming the Oils-Energy sector's gain of 4.04% [2]. The company is scheduled to release its earnings on July 24, 2025, with projected earnings per share (EPS) of $1.75, representing a 35.42% drop compared to the previous year [2]. The consensus estimate also anticipates revenue of $27.83 billion, down 19.3% from the prior-year quarter [2].

Valuation Metrics

From a valuation perspective, Valero Energy trades at a Forward P/E ratio of 25.03, which is higher than the industry average of 18.64 [2]. The PEG ratio for VLO is currently 2.7, indicating a premium valuation compared to the industry average of 1.75 [2]. These metrics suggest that investors should consider the potential for higher growth rates to justify the current valuation levels.

Conclusion

Wolfe Research's downgrade of Valero Energy from 'Outperform' to 'Peer Perform' reflects a cautious approach to the stock's valuation, given its recent strong performance. Despite the downgrade, analysts maintain a generally positive outlook, with a majority rating the stock as a 'Moderate Buy.' Investors should closely monitor Valero Energy's earnings report and future analyst revisions to gauge the stock's performance and potential for growth.

References:
[1] https://www.gurufocus.com/news/2975062/valero-vlo-downgraded-by-wolfe-research-due-to-valuation-concerns-vlo-stock-news
[2] https://finance.yahoo.com/news/heres-why-valero-energy-vlo-220005763.html
[3] https://www.marketbeat.com/stocks/NYSE/VLO/forecast/