Ahead of the Bell: Deutsche Bank expects Tesoro to fall
NEW YORK—A Deutsche Bank analyst cut his price target and reiterated his "Sell" rating on Tesoro Corp., saying higher oil prices are creating the toughest environment for oil refiners since Sept. 11, 2001.
Paul Sankey lowered his price target to $20 from $26 in a client note early Thursday, implying he expects the stock to lose about 36 percent.
Facing record-high crude prices, Tesoro is liquidating inventory, accumulating debt and "burning through cash," Sankey said. He predicted oil would continue to rise even if demand weakens.
"Tesoro needs relief," he said. "But we're not convinced its over. And even if crude falls, we're not convinced that gasoline will hold, with demand weak."
Light, sweet crude for June delivery climbed $1.69 on the Nymex Wednesday to a record high of $123.53 a barrel.
On Tuesday, Tesoro said it swung to a bigger-than-expected loss in the first quarter of 60 cents per share.
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