UBS Raises Valero Energy Target, Predicts New All‑Time Highs

Valero Energy Corp. (NYSE:VLO) has been on a tear this year, its share price more than doubling since early 2026 thanks to an unexpected surge in global refining margins. The rally feels almost like a textbook case of supply‑side shock meeting a hungry market for gasoline, diesel and jet fuel.

While a handful of skeptics whisper that the up‑trend may be winding down, the research team at UBS is far from convinced. In a note released on September 8, UBS lifted its price objective from $355 to a bold $450 and kept a firm “Buy” rating on the stock. That new target implies roughly a 17 % upside from today’s price and, more importantly, sits comfortably above the all‑time high of about $393 that Valero touched earlier this month.

Why the optimism? UBS points to the fact that refining margins are likely to stay elevated longer than most market participants expect. Even if crude flows normalize in the Middle East, many of the region’s refineries that were damaged or idled during recent conflicts will need months—if not years—to get back to full capacity. Add to that a fresh wave of Ukrainian attacks on Russian plants, and the global refining landscape remains unusually tight.

For Valero, that environment is a windfall. The company’s chief operating officer, Gary Simmons, told investors that an arbitrage gap for jet‑fuel exports to Europe has re‑opened, giving the U.S. refiner a lucrative outlet for its product. Moreover, as refiners shift to winter‑diesel specifications later this quarter, jet‑fuel spreads are projected to improve, adding another layer of upside.

But it isn’t just the market that’s cheering Valero on. The firm’s capital‑allocation discipline has translated into hefty shareholder returns. In the most recent quarter Valero handed back $2.6 billion to investors—a staggering jump from the $695 million it returned a year earlier. TD Cowen’s Jason Gabelman estimates that the company could repurchase roughly 20 % of its market value between now and the end of 2027, a move that would likely boost earnings per share.

That said, the rally is not without risk. The very profits that have catapulted Valero’s stock were born of an abnormal market backdrop. If crack spreads dip even modestly, earnings could soften and the share price might correct sharply. In other words, the upside is compelling, but the downside is tethered to the durability of those high margins.

Overall, UBS’s upgraded target signals confidence that the refining crunch will linger, giving Valero a solid platform for continued growth. Investors should keep an eye on margin trends and the company’s aggressive buy‑back program, both of which could dictate how high the stock can climb.