Viva Energy shares climb as Macquarie hikes target price, stays 'neutral' rated

The news: Viva Energy saw its shares climb after Macquarie hiked its target price on the oil refiner and retailer due to improved non-refining expectations and stronger-than-expected refining margins.

The numbers: Viva shares were up 3.1% to $2.33 at 1:30pm AEST, having advanced more than 60% since early April following a steep selloff earlier this year.

Macquarie reiterated its 'neutral' rating on the stock but lifted its 12-month target price by 18% to $2 per share. Its analysts raised its expectations for first-half non-refining expectations, with earnings forecast at $318 million, compared to guidance of between $270 million and $330 million, and consensus estimates of $307 million.

The context: Macquarie analysts said they are attracted to Viva's convenience growth opportunity but retained their 'neutral' rating due to Viva's share price rally since April. They noted that while refining margins have improved, fuel volumes and tobacco declines "appear to be structural headwinds that Viva will need to overcome".