Why Marathon Petroleum Is Poised to Pull Back

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Marathon Petroleum (NYSE: MPC  ) slipped 2% this morning after Imperial Capital downgraded the oil refining giant from "outperform" to "in-line".

So what: Along with the downgrade, analyst Ann Kohler planted a price target of $73 on the stock, representing just 3% worth of upside to Friday's close. While contrarian investors might be attracted to the stock's decline since April, Kohler believes that Marathon's valuation remains pretty fair and leaves little room for appreciation.

Now what: While Imperial isn't crazy about Marathon's stock price, it continues to be bullish on the company's operating prospects going forward. "With $2.0bn in cash as of 9/30/13 and continued strong free cash flow generation, we believe MPC remains well positioned to invest in economic growth projects across its integrated system as well as return cash to shareholders," noted Imperial. "At its upcoming analyst meeting, which is scheduled for 12/4/13, we expect management will continue to stress a balanced approach for cash." So while the valuation isn't exactly dirt cheap, Marathon's still-attractive growth and dividend trajectory still make it a solid long-term opportunity. 

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