On Friday, Wells Fargo made adjustments to its outlook on HF Sinclair (NYSE: DINO) shares, a petroleum refining company, by reducing the price target to $61 from the previous $75. The firm maintained its Overweight rating on the stock. The revision was attributed to a forecast of weaker refining margins, particularly due to tighter crude differentials, as well as a decrease in marketing expectations.
The analyst from Wells Fargo indicated that their estimates for crude throughputs are aligned with the midpoint of the company's guidance, with per barrel operating expenses expected to remain consistent quarter over quarter. Projections for other segments of HF Sinclair's business were not altered.
The new second quarter and full-year 2024 earnings per share estimates have been set at $0.78 and $3.83, down from the prior estimates of $1.51 and $5.99, respectively.
The price target adjustment to $61 reflects these revised earnings expectations, which are based on a sum-of-the-parts (SOTP) analysis of the firm's projected 2025 EBITDA estimates.
Wells Fargo's analysis and subsequent price target reduction come amidst a challenging environment for refining margins, which are influenced by the spread between the cost of crude oil and the price of refined products.
HF Sinclair's stock price will continue to be monitored by investors as market conditions evolve and the company's financial performance is assessed in light of these new estimates.
In other recent news, HF Sinclair Corporation has been subject to multiple price target revisions. Mizuho has lowered its target from $61 to $55 while maintaining a neutral stance on the stock.
This adjustment was made in anticipation of a second-quarter performance that may not meet current consensus expectations, despite the company's refining operations performing well.
Mizuho predicts significant misses in earnings before interest, taxes, depreciation, and amortization (EBITDA), free cash flow (FCF), and earnings per share (EPS) for the second quarter of 2024.
Simultaneously, Piper Sandler has also reduced its price target for HF Sinclair shares from $65 to $58, maintaining an Overweight rating. This adjustment follows a reassessment of the company's financial projections, with Piper Sandler noting a significant expected decline in EBITDA. The firm has reduced its second quarter and full-year 2024 EBITDA estimates for HF Sinclair by 25% and 12%, respectively.
In addition to these developments, 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.
Lastly, HF Sinclair reported a robust first-quarter performance 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 regular quarterly dividend of $0.50 per share.
InvestingPro Insights
In light of the recent adjustments by Wells Fargo on HF Sinclair's outlook, several metrics and tips from InvestingPro provide a broader perspective on the company's financial health and stock performance. With a market capitalization of $9.24 billion and a trailing P/E ratio that has decreased to 5.97 from 6.66, HF Sinclair appears to be valued attractively in terms of earnings. The company's dividend yield stands at a solid 4.16%, signaling a potential income stream for investors, which is reinforced by the fact that HF Sinclair has maintained dividend payments for 37 consecutive years—an InvestingPro Tip highlighting the company's commitment to shareholder returns.
Another InvestingPro Tip suggests that the stock is currently in oversold territory according to the Relative Strength Index (RSI), which may interest value investors looking for entry points. Additionally, the company's liquid assets exceed its short-term obligations, providing financial flexibility. While analysts have revised their earnings downwards for the upcoming period, InvestingPro notes that the company is still expected to be profitable this year. Moreover, HF Sinclair's stock is trading near its 52-week low, which, combined with a low price volatility, could indicate a potential buying opportunity for long-term investors.
For readers interested in a deeper dive into HF Sinclair's financials and stock performance, InvestingPro offers additional tips and insights. Discover more and make informed investment decisions with InvestingPro. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. There are 9 additional InvestingPro Tips available for HF Sinclair to help you further analyze its potential.
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