Deutsche Bank Securities Names Frontier Oil (FTO) A Top Pick

Deutsche Bank Securities analysts Paul Sankey, Silvio Micheloto and David T. Clark rated shares of Frontier Oil Corporation FTO a Buy with a price target of $15 per share. The analysts said they see good upside potential at Frontier Oil Corporation. The analysts said that they value refiners on a top-down forward earnings and multiple basis and that their $15 price target is based on an 11x target P/E multiple and $1.35 mid cycle earnings per share. The Deutsche Bank Securities analysts wrote, "company specific risks: exposure to a tightening heavy-light spread, sustained considerably higher or lower crack spreads than we have forecast, recession, geopolitical risks throughout the oil markets, natural disasters, and accident or explosion at one of the companies' refineries. Small-cap refiners with few assets, such as Frontier, are particularly hurt by the latter potential outcome. Fires have a triple damage of costing money directly, costing money through opportunity cost, and finally costing through undermining market view of management skill and asset risk."