On Friday, investment firm Piper Sandler adjusted its outlook on Par Petroleum (NYSE:PARR) shares, reducing the price target from $43.00 to $37.00. The firm affirmed its overweight rating on the stock. The revision reflects a decrease in the expected earnings before interest, taxes, depreciation, and amortization (EBITDA) for the second quarter and full year of 2024.
The firm's analyst cited a significant reduction in EBITDA estimates, by 25% for the second quarter and 12% for the full fiscal year of 2024, compared to previous projections.
This adjustment indicates potential downside risks to consensus estimates on Wall Street, with expectations of 20% and 6% lower than the Street's forecasts for the second quarter and full year, respectively.
The earnings per share (EPS) estimates for Par Petroleum were also revised, with the analyst projecting an average downside to Street estimates of 42% for the second quarter of 2024 and 22% for the full year. This suggests that the company's financial performance may not meet the market's expectations.
In the broader refining sector, Valero Energy Corporation (NYSE:VLO) is considered by Piper Sandler to be in a favorable position heading into the second-quarter results, with a 20% downside seen.
However, the analyst pointed out that Par Petroleum, along with PBF Energy (NYSE:PBF) and HollyFrontier Corporation, previously known as DINO, are among those facing the most significant downside risks.
The methodology for establishing price targets for Valero and Par Petroleum has been updated. Valero's refining multiple has been increased from 6.25x to 6.5x, reflecting its status as a top-quality refiner. Conversely, Par Petroleum's refining multiple has been lowered from 4.5x to 4.0x to align with current conditions in the West Coast refining market.
In other recent news, Par Pacific Holdings (NYSE:PARR), Inc. has entered into a crude oil procurement deal with Citigroup Energy Inc., coinciding with the termination of its previous agreement with J. Aron & Company LLC. The company has also increased its existing asset-based revolving credit facility to $1.4 billion.
In recent developments, Piper Sandler revised Par Pacific's stock target to $43.00, while maintaining an Overweight rating. TD Cowen also adjusted its outlook, reducing the stock target to $42.00 but reaffirming a Buy rating. Par Pacific reported a robust first-quarter financial performance, with an adjusted EBITDA of $95 million and adjusted net income of $0.69 per share.
The company's renewable fuel initiatives are progressing, and it maintains a strong balance sheet with over $575 million in liquidity. These developments reflect the company's ongoing commitment to strategic growth and operational efficiency.
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