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Investing.com -- Evercore ISI initiated coverage on U.S. refining companies, rating Phillips 66 (NYSE:PSX) as Outperform while assigning neutral ratings to Marathon Petroleum (NYSE:MPC) and Valero Energy (NYSE:VLO), citing valuation and operational outlook.

The firm said Phillips 66 is positioned to benefit from a multi-year effort to streamline operations and expand its midstream business, including recent acquisitions of DCP Midstream and EPIC.

It said improved performance in refining and chemicals, along with progress on cost control and asset sales, could help close the stock’s valuation gap with peers.

Evercore set a price target of $130, compared with Phillips 66 of $124 on Wednesday trading.

Marathon Petroleum was rated In Line, with Evercore noting that the company’s strong cash flow and exposure to midstream assets through MPLX (NYSE:MPLX) support significant shareholder returns.

However, the stock has already outperformed peers this year, and the firm said further upside may be limited without a new catalyst. Its price target of $170 is in line with its current price.

Valero, also rated In Line, was described as a cost-efficient operator with favorable positioning on the U.S. Gulf Coast and steady access to export markets.

Evercore said the company is likely to generate stable returns but added that recent gains and current consensus expectations limit near-term upside.

It set a $135 price target, below Valero’s Thursday trading price of $139

Brokerage cautious stance is on an already run up in the stocks this year, while noting Phillips 66 as a potential beneficiary of operational and portfolio changes in the years ahead.

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