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Citi Analyst Calls Slowdown in Refiners Rally

Monday, 17 Sep 2012 | 12:53 PM ET

The robust run in refinery stocks is nearing its end, Citigroup analyst Faisel Khan said Monday on CNBC.

“We’re having a phenomenal third quarter, so obviously we have to capitalize those cash flows and earnings into our valuations and estimates,” he said on “Fast Money.”

Citi Analyst Calls Slowdown in Refiners Rally
Although refinery stocks have had a strong run, they are poised for a drop, says Faisel Khan, Citigroup analyst.

Khan downgraded to neutral Valero, Marathon and Phillips 66, saying they look fully valued.

“They look cheap today, but they look fairly valued tomorrow,” he said. “Up 65 percent, the third quarter looks phenomenal, but we see a number of risks over the horizon into the fourth quarter and especially into next year, which could contain margins and even cause them to narrow.”

“We have no more ‘buy’-rated names in the refining group,” he added.

Trader disclosure: On Sept. 17, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Stephanie Link is long AAPL; Stephanie Link is long JPM; Stephanie Link is long WFC; Stephanie Link is long EBAY; Stephanie Link is long AIG; Joe Terranova is long VRTS; Joe Terranova is long WFM; Joe Terranova is long SWN; Joe Terranova is long AAPL; Joe Terranova is long TRV; Joe Terranova is long VZ; Joe Terranova is long VLO; Joe Terranova is long CSTR; Joe Terranova is long CHKP; Joe Terranova is long EMC; Joe Terranova is long NXPI; Joe Terranova is long AAPL SEPT. 655 PUTS; Joe Terranova is long AAPL SEPT. 640 PUTS; Mike Murphy is long WFC; Mike Murphy is long TGT; Mike Murphy is long FB; Mike Murphy is long EBAY; Josh Brown is long MRK; Josh Brown is long AAPL; Josh Brown is long RAX; Josh Brown is long LULU;

For Faisal Kahn
Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of CVX

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of VLO

Within the past 12 months, Citigroup Global Markets Inc. or its affiliates has acted as manager or co-manager of an offering of securities of PSX.

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