Analysts Predict Big Gains For This Energy Stock

Goldman Sachs believes that now is the time to buy Marathon Petroleum if you have the money.

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There has been an upgrade of the energy stock from neutral to buy by the firm. Previously, Goldman's top pick in the refining oil sector was Marathon Petroleum, which was downgraded to neutral from 2018 to 2022 after the company "prematurely" reduced its rating. The stock was again upgraded by Neil Mehta, an analyst, who said that he still sees momentum for the stock to return capital and execute effectively in the coming months. 

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“We lowered our rating on MPC to Neutral from Buy in May 2022, mostly because of its valuation. Despite this, the company has continued to outperform GS and Street estimates across all of its business segments," Mehta wrote in a note dated Wednesday. 

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"MPC has been able to return substantial amounts of capital in the past few years, and in light of this we are raising our buyback forecasts. ... In essence, we believe MPC deserves a premium multiple based on these factors," Mehta concluded. 

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Analysts at the brokerage firm raised their price target on the stock from $132 to $150, representing a 14% increase over Tuesday's close. 

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According to Mehta, Marathon Petroleum is likely to continue to outperform due to the high rate of capital returns and strong operational performance that will allow it to outperform the crack spread - a difference between the price of crude oil and that of refined products — in the coming years.

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During the past year, Marathon Petroleum's stock has gained more than 10% amid a 58.2% increase in its price for the last 12 months, putting the stock up over 1% at the time of this writing.