Cowen Turns Bullish on Marathon Stock After Speedway Sale

The stock is still struggling to separate itself from its March lows

Deputy Editor
Aug 12, 2020 at 9:36 AM
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Cowen just lifted its rating on oil and gas giant Marathon Petroleum Corp (NYSE:MPC) to "outperform" from "market perform." The analyst also hiked its price target to $43 from $37, citing the firm's sales of its gas station unit Speedway, and adding that it sees additional restructuring opportunities that could help give MPC a boost in the long-term. Cowen added that cost cutting could bring Marathon in line with its peers, but warned that the effects of COVID-19 could make that more difficult. At last check, the equity is up 3% to trade at $38.07. 

The majority of analysts covering MPC were already bullish coming into today. Just four of the 13 in coverage called it a "hold," compared to nine "buy" or better ratings. Meanwhile, the 12-month consensus price target of $48.71 is a 32.8% premium to last night's close. 

Meanwhile, bulls rule the options pits, with the 9,358 calls exchanged in the last 10 days more than tripling the 2,059 puts exchanged in the same time period. That being said, now looks like a good time to speculate on the stock's next move with options. Marathon's Schaeffer's Volatility Index (SVI) of 52% ranks in the 17th percentile of its annual range, implying options players are pricing in relatively low volatility expectations at the moment. Plus, the equity's Schaeffer's Volatility Scorecard (SVS) ranks at 93 out of a possible 100. This means MPC has tended to exceed option traders' volatility expectations during the past year -- a boon for option buyers.

Like many of its sector peers, MPC has struggled to distance itself from its mid-March trench. The stock's latest attempt to rally back to its pre-COVID levels was met with rejection at the 150-day moving average. This trendline has helped lead the equity to a roughly 38% year-to-date deficit, though today's pop could help Marathon stock break north of the region.

 


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