Marathon Petroleum Corporation (MPC) got a confidence boost from JPMorgan this week, even though the refiner's third-quarter results were something of a mixed bag. Analyst Zach Parham lifted his price target to $211 from $183 while keeping a neutral rating on the stock.
Here's the story: Marathon reported revenue of $35.85 billion last week, comfortably beating the $32.55 billion analyst estimate. But adjusted earnings per share came in at $3.01, up from $1.87 a year earlier but still short of the $3.15 consensus. Not exactly a clean win, but not a disaster either.
The company's fourth-quarter guidance calls for total refinery throughput of 2.91 million barrels per day, including 2.68 million barrels of crude oil and 230,000 barrels of other charge and blendstocks.
What Went Wrong in Q3
Parham points out that Marathon posted weaker-than-expected refining earnings, with consolidated capture coming in around 96%. The culprits? Pressured Gulf Coast and West Coast margins, compressed jet and diesel spreads, lower clean product margins, and some inconvenient downtime at the Galveston Bay hydrocracker. Sequential declines basically came from all directions.
The 2026 Optimism
But here's where it gets interesting. Marathon expects strong demand and tight supply conditions to keep midcycle refining margins elevated well into 2026. The company sees several tailwinds: West Coast refinery closures reducing competition, robust diesel and jet demand, wider crude differentials, and low ASCI prices all working in their favor.
Marathon is also targeting operational improvements at its Galveston Bay and Los Angeles refineries, along with seasonal inventory drawdowns in the fourth quarter.
Revised Numbers
Parham significantly raised his FY26 estimates based on revised strip cracks. His new EPS forecast sits at $14.82, up from $11.84 previously and above the consensus of $13.68. He's also projecting cash flow per share of $33.69 versus consensus of $30.05.
The analyst expects FY26 refining utilization around 93%, gross margins of $17.63 per barrel, and operating expenses of $5.59 per barrel. Marathon will likely generate $6.5 billion in free cash flow, potentially supporting share buybacks of roughly $1.2 billion per quarter in 2026, according to Parham.
Price Action: MPC shares traded down 0.41% at $199.31 on Wednesday.
