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On Tuesday, Sunoco (NYSE:SUN) shares skilled a shift in market sentiment as Citi adjusted its stance on the power firm’s shares. The agency downgraded the inventory from Purchase to Impartial, setting a worth goal of $65.00.
The shift in score comes after Sunoco shares gained 6% in comparison with the Alerian MLP Index (AMZ) following the announcement of its acquisition of NuStar Power (NS).
Citi had beforehand upgraded Sunoco to Purchase with the expectation that the corporate would surpass its accretion goal and obtain the guided synergy ranges from the NuStar deal. Though these outcomes are nonetheless anticipated, Sunoco’s current inventory efficiency has narrowed the valuation hole that was current post-announcement.
The market has largely acknowledged the accretion and synergy advantages, with the primary concern being the potential dilution from incentive distribution rights (IDRs).
With the NuStar transaction nonetheless pending and with out vital new information, Citi sees the risk-reward steadiness for Sunoco as now extra even. The agency notes that at 8.1 occasions projected 2026 EBITDA, Sunoco’s valuation aligns with that of diversified friends, reflecting the worth creation and transformative impression of the deal.
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