Why Raymond James Is Calling for a $290 Price Tag on Valero (VLO)

1 week ago 5

Joel South

Wed, March 25, 2026 astatine 8:31 AM CDT 4 min read

Valero Energy (VLO) posted Q4 2025 EPS of $3.82, beating estimates by $0.55, portion Raymond James raised its terms people to $290 from $215, citing elevated refining margins of $13.14 per tube successful Q3 2025 and the company’s structural vantage processing discounted dense crude with 3.1 cardinal barrels per time throughput astatine 98% capableness utilization.
Valero’s Gulf Coast sour crude vantage and guardant refining borderline projections suggest net enlargement volition persist beyond existent geopolitical spikes, supported by dividend maturation and a $230 cardinal optimization task launching successful H2 2026.
Have You work The New Report Shaking Up Retirement Plans? Americans are answering 3 questions and galore are realizing they tin discontinue earlier than expected.

Valero Energy (NYSE:VLO) has been 1 of the vigor sector's standout performers and the Street's statement terms people sits astatine conscionable $214.22, but Raymond James is making a acold bolder call.

Raymond James raised its terms people connected Valero to $290 from $215, maintaining a Strong Buy rating. With the banal trading adjacent $241.75, that people sits good supra the existent trading terms and sits good supra expert consensus. But tin VLO realistically scope $290 by extremity of 2026? Raymond James

Raymond James acknowledges that statement estimates for Q1 whitethorn person risen sharply owed to lipid marketplace and Middle East conflict-driven borderline spikes, but short-term refiners whitethorn conflict to afloat seizure these "spiky" margins. The condemnation is successful what comes next: guardant portion margins suggest considerably higher net potential, with medium-term upside apt to predominate marketplace absorption arsenic elevated refining margins persist good aft the struggle subsides. That structural thesis is grounded successful existent operational data. Valero posted Q4 2025 EPS of $3.82, beating estimates of $3.27, portion Q3 2025 refining margins reached $13.14 per tube versus $9.09 a twelvemonth earlier.

Have You work The New Report Shaking Up Retirement Plans? Americans are answering 3 questions and galore are realizing they tin retire earlier than expected.

Structural sour crude advantage: Valero's Gulf Coast coker infrastructure gives it a durable borderline processing discounted dense crude. Management noted connected the Q4 net telephone that Venezuelan crude processing capableness is present "substantially north" of the humanities 240,000 barrels per time pursuing the 2023 Port Arthur coker expansion, creating a lasting feedstock outgo vantage that compounds returns done the cycle.
Record operational efficiency: CEO Lane Riggs called 2025 "our champion twelvemonth for mechanical availability, unit safety, and biology performance," with grounds throughput of 3.1 cardinal barrels per time astatine 98% capableness utilization. That reliability straight converts to currency flow.
Shareholder returns with dividend growth: Valero raised its quarterly dividend 6% to $1.20 per stock successful January 2026, extending 38 consecutive years of dividend payments. With FY2025 operating currency travel of $5.826 cardinal and a committedness to instrumentality a minimum of 40-50% of adjusted operating currency travel to shareholders done the cycle, the income watercourse is well-supported.