Tesoro downgraded to "Sell" on weakened margins

Tesoro Corp.'s outlook is weighed down by pressured refining margins and its high cost structure, said an analyst on Tuesday as he downgraded the refiner's stock.

Goldman Sachs analyst Arjun Murti added Tesoro to the "Americas Sell List," citing the company's overall less competitive asset base, which he expects will erode refining margins.

Even though the company's stock has fallen 30 percent since May 6, Murti does not expect a rebound.

"We believe Tesoro shares will remain under pressure as refining margins and hence its earnings remain under pressure," Murti said, adding that he expects the company to underperform other energy equities until fundamentals in the refining market improve meaningfully.

The refining sector as a whole faces a dismal outlook, Murti noted, citing the new refineries ramping up in Asia, rising gasoline inventories, Marathon's Garyville major refinery expansion starting up this fall and pressured profits.

Shares of Tesoro fell 16 cents to $12.72 in late afternoon trading.