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Highlights
- Macquarie downgrades Viva Energy and Ampol amidst rising oil demand risks
- US tariffs and weaker refining margins lead to lower growth expectations
- Price targets for VEA and ALD shares reduced significantly by Macquarie
Macquarie has issued a fresh note highlighting its increased caution on oil refining stocks, particularly in light of the recent rise in US tariffs. The broker downgraded its ratings for Viva Energy Group Ltd (ASX: VEA) and Ampol Ltd (ASX: ALD) due to concerns over global oil demand and refining margins.
One of the main issues raised by Macquarie is the heightened uncertainty regarding 2025 oil demand. With larger-than-expected US tariffs now in place, there is a greater risk to global growth and oil demand. Macquarie noted that China’s oil demand is already weaker than anticipated year-to-date, adding to concerns for the sector.
Previously, Macquarie had positioned itself for tighter refining supply and demand (S/D) in 2026-2027, but the new risks surrounding oil demand have altered this outlook. As a result, Macquarie expects weaker refining margins, which directly impacts the profitability of companies like Viva Energy and Ampol.
Outlook for Viva Energy (ASX: VEA)
Macquarie has cut its 12-month price target for Viva Energy from AUD2.80 to AUD1.70 per share, a reduction of 39%. The broker also reduced its earnings per share (EPS) estimates by around 28% for 2025 and 12% for 2026, citing lower refining margins and slower growth in Viva Energy’s OTR store network rollout. Macquarie remains cautious, especially regarding the company's balance sheet and future expansion plans.
Outlook for Ampol (ASX: ALD)
For Ampol, Macquarie reduced its price target from AUD28 to AUD23.70, a 15% decrease. The broker also lowered its EPS estimates by 10-12% for 2025 and 2026 due to weaker refining margins. Despite these challenges, Ampol continues to face elevated capital expenditures, which Macquarie projects will impact its financial outlook through 2025.
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