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Sunoco upgraded at Barclays, which sees further gains after c-store sale

Published 04/07/2017, 12:22 PM
© Reuters.  Sunoco upgraded at Barclays, which sees further gains after c-store sale
BARC
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SUN
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  • Sunoco (SUN +3.3%) extends yesterday's 20% surge following its $3.3B sale of 1,110 convenience stores to the Japanese operator of the 7-Eleven convenience store chain.
  • The deal is seen as the first step in SUN's strategic move away from company-operated convenience stores to its fuel supply business.
  • Barclays (LON:BARC) upgrades shares to Overweight from Equal Weight with a $35 price target, raised from $26, based on the c-store divestiture, which it says opens up visibility for SUN to reach 4.5x-4.75x leverage and 1.1x coverage.
  • The firm thinks the shares have more room to run and warrants further yield compression vs. 11.5% currently given that SUN is on the path to rehabilitation.


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