On Monday, UBS reiterated its Buy rating on HF Sinclair (NYSE:DINO), maintaining a $73.00 price target for the company's stock. The firm has adjusted its second-quarter 2024 earnings per share (EPS) estimate for HF Sinclair to $0.76, which is lower than the consensus estimate of $1.57 and the previous UBS estimate of $1.60. The revision is attributed to a weakness in refining margins, commonly referred to as cracks.
The second-quarter earnings before interest, taxes, depreciation, and amortization (EBITDA) estimate has been set at $406 million, a slight increase from the first quarter's $399 million. Capital expenditures (capex) for the same period are projected to be $130 million, excluding costs related to turnarounds. Additionally, UBS anticipates that HF Sinclair will buy back shares worth $371 million in the current quarter.
Despite a challenging refining and marketing (R&M) margin environment, the company's operations are showing signs of improvement. The Refining Division (RD) is expected to report an EBITDA loss of $11 million, which is an improvement over the $18.5 million loss recorded in the first quarter of 2024. The Marketing segment is projected to generate an EBITDA of $16 million, a slight decrease from $17.73 million in the previous quarter. This is due to increased volumes quarter-over-quarter, though margins are anticipated to be weaker compared to the first quarter.
The price target of $73 is based on a 6.25 times multiple of the firm's estimated calendar year 2025 EBITDA of $2,451 million. UBS's outlook for HF Sinclair remains positive, with the firm's operations showing signs of advancement despite the current margin pressures.
In other recent news, HF Sinclair has been the subject of several analyst adjustments. Mizuho Securities lowered its price target for HF Sinclair shares to $61.00, down from $64.00, due to projections for regional benchmark crack spreads. The firm maintained a Neutral rating on the stock. On the other hand, Piper Sandler trimmed its target for HF Sinclair shares to $58.00 from $65.00, citing concerns over the company's financial outlook and potential decline in earnings. Despite the reduction, the firm kept an Overweight rating on the stock.
In addition to these adjustments, HF Sinclair announced robust first-quarter earnings, with a net income of $315 million and an adjusted net income of $142 million. The company also announced a new $1 billion share repurchase authorization and maintained its quarterly dividend of $0.50 per share.
In terms of personnel changes, HF Sinclair's Vice President, Controller, and Chief Accounting Officer, Indira Agarwal, has stepped down, with CFO Atanas H. Atanasov assuming her responsibilities until a permanent replacement is found. These are the recent developments that provide valuable insights into HF Sinclair's financial health and strategic direction.
InvestingPro Insights
As HF Sinclair (NYSE:DINO) navigates the refining industry's margin pressures, real-time data from InvestingPro shows a company with a robust financial profile. With a market capitalization of $10.25 billion and a low price-to-earnings (P/E) ratio of 6.66, the company presents a potentially attractive valuation for investors. One notable InvestingPro Tip highlights that management has been aggressively buying back shares, which is in line with UBS's anticipation of a $371 million share repurchase in the current quarter. This could signal confidence from the management in the company's future prospects.
Another key aspect for shareholders is the company's high shareholder yield, a metric that combines dividends and share buybacks, which has been maintained for 37 consecutive years. This consistency in rewarding shareholders may appeal to those looking for stable returns. Additionally, the company's gross profit margin stands at 10.85%, which, according to an InvestingPro Tip, suggests that HF Sinclair operates with weak gross profit margins, a factor that investors should consider in the context of industry-specific challenges.
For those looking to delve deeper into the company's financials and future outlook, there are additional InvestingPro Tips available that provide further insights into HF Sinclair's performance and analyst expectations. Interested readers can unlock these tips and benefit from the full range of analytical tools on InvestingPro by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.