(SUN) Sunoco Incorporated – Bear of the Day

We are maintaining our Underperform recommendation on Sunoco Inc. (SUN), based on a number of issues that have stalled the company’s stock price. Sunoco’s operational reliability issues and increased unscheduled downtime have overshadowed its strong quarterly results and gains from successful restructuring initiatives over the last two years.

Rising crude oil prices have added to Sunoco’s challenges by increasing the cost of production. Pitfalls from the ArcelorMittal litigation settlement, as well as the lack of geographic diversification and refining flexibility, have also become major liabilities for Sunoco, in our view.

Given these headwinds, we expect Sunoco shares to be under pressure in the near future. Our $37 price objective reflects a 2011 P/E multiple of 42.1x.

SUNOCO INC (SUN): Free Stock Analysis Report

Zacks Investment Research

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