On Monday, Mizuho (NYSE:MFG) Securities adjusted its stance on PBF Energy (NYSE:NYSE:PBF), reducing its price target from $31.00 to $28.00, while maintaining an Underperform rating on the company's shares. The revision comes in anticipation of a significant shortfall in PBF Energy's fourth-quarter 2024 earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) compared to market consensus.
The firm's analysts predict that PBF Energy will miss its quarterly EBITDA and EPS by approximately 60% and 30%, respectively. This expected underperformance is attributed primarily to the company's heightened sensitivity to the deteriorating refining industry conditions compared to its competitors. Factors contributing to this negative outlook include reduced refining margins across all regions and a lower overall margin capture, exacerbated by a scheduled turnaround at the company's Chalmette refinery.
Mizuho analysts also highlighted the narrowing of the Western Canadian Select (WCS) crude differential, signaling smaller discounts for heavy and medium sour crude grades. This trend particularly affects complex coastal refiners like PBF Energy, which are already facing a challenging macroeconomic environment. Despite these headwinds, PBF Energy has demonstrated efficiency in operating its refining system, with throughput volumes expected to align with Street estimates.
The reduction in the net asset value (NAV)-based price target to $28 per share from the previous $31 reflects the anticipated weaker market conditions in the near term. Mizuho reaffirmed its Underperform rating for PBF Energy, citing persistent macro challenges and the company's exposure to unfavorable heavy and sour crude economics.
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