Update shared on06 Sep 2025
Fair value Increased 0.81%Analysts have raised Valero Energy’s price target slightly to $157.94, reflecting increased confidence in structurally higher refining margins and Valero’s competitive advantage in renewables, although some remain cautious on valuation after recent outperformance.
Analyst Commentary
- Bullish analysts highlight a structural upcycle in refining, positioning Valero to benefit from favorable long-term industry trends.
- Several upward price target revisions reflect increased confidence in higher future refining margins and updated modeling to account for higher 2026 estimate multiples.
- Analysts note Valero's material head start in key renewable energy themes as a competitive advantage supporting its valuation.
- Some bearish analysts downgrade the stock on valuation grounds after significant share price outperformance, warning of limited underlying earnings growth and potential downside from current levels.
- Resilient demand for refined products, despite economic uncertainties, supports continued optimism among bullish analysts regarding near-term earnings strength.
What's in the News
- California officials are seeking to broker a sale of Valero Energy's Benicia refinery to prevent closure in April 2026, a rare move reflecting concerns over California’s gasoline supplies and prices; if unsold, the facility will shut, impacting roughly 17% of the state's gasoline supply when combined with the forthcoming closure of the Phillips 66 Los Angeles-area refinery (Reuters, Key Developments).
- The California Energy Commission is actively engaging with potential domestic and European buyers, with particular outreach to HF Sinclair (prior discussions fell through due to environmental concerns), amid tensions between the state's climate agenda and energy companies (Key Developments).
- Recent and pending refinery closures are projected to increase California's dependence on costly fuel imports and could push average gasoline prices up to $6-$8 per gallon, according to university studies; California's current average is already the highest in the U.S. at $4.48/gallon (Key Developments).
- Valero repurchased 2.57 million shares ($337.8 million) in Q2 2025, completing its $3.65 billion buyback program announced in 2023, having bought back a total of 25 million shares (7.7% of shares outstanding) (Key Developments).
- Valero was dropped from the Russell Top 200 and Top 200 Value Indexes and added to the Russell Midcap and Midcap Value Indexes as of June 2025, reflecting changes in the company’s market capitalization and index composition (Key Developments).
Valuation Changes
Summary of Valuation Changes for Valero Energy
- The Consensus Analyst Price Target remained effectively unchanged, moving only marginally from $157.06 to $157.94.
- The Discount Rate for Valero Energy remained effectively unchanged, moving only marginally from 7.08% to 7.15%.
- The Future P/E for Valero Energy remained effectively unchanged, moving only marginally from 14.70x to 14.81x.
Disclaimer
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