Tesoro a Buy Pre-Earnings - Analyst Blog
San Antonio, Texas-based
Tesoro Corporation (
TSO) is an independent refiner and marketer of refined petroleum products in the western U.S. The company operates in two segments: Refining (accounted for 85% of the company s total 2007 operating income) and Retail (15%).
We are maintaining our Buy recommendation for Tesoro shares ahead of the company's 4th-quarter 2008 results. Given our continued positive view of the group's underlying fundamentals, we believe there is potential for significant upside for this well positioned refining name.
We particularly like Tesoro for its West-Coast leverage and strong balance sheet with the ability to fund capex with operating cash flows. We have lowered our 2009 estimate ($1.40 vs. $1.52) to reflect the still challenging refining margin environment and introduced our 2010 estimate at $1.75.
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