On Thursday, Mizuho (NYSE:MFG) Securities reiterated a Neutral rating on shares of Par Pacific Holdings (NYSE:NYSE:PARR) with a price target of $22.00. The firm anticipates misses in both EBITDA and EPS for the fourth quarter of 2024, expecting them to be down by 106% and 75% respectively compared to the current consensus.
This aligns with InvestingPro data showing two analysts recently revising their earnings estimates downward, despite the company's attractive P/E ratio of 3.4x. This projection is attributed to weaker results in the Refining segment, which saw a 41% decrease in consolidated indicator margin and a decline in aggregate margin capture by approximately 10%.
The report also highlighted that despite the challenging refining margin environment and lower seasonal volumes, Par Pacific's operations remained robust. Attention was drawn to the upcoming turnaround in Montana, scheduled for the first half of 2025, which is likely to be a significant point of discussion during the company's earnings call.
Mizuho's price target for Par Pacific is based on a net asset value (NAV) approach and takes into account the company's exposure to niche markets in PADDs 4 and 5. The firm's neutral stance is influenced by the broader weakness in the refining sub-sector, which is offset by Par Pacific's competitive positioning and valuation relative to its peers. The reaffirmation of the $22 price target reflects Mizuho's view of the stock's potential amid the current industry dynamics.
In other recent news, Par Pacific Holdings experienced a mix of developments. Mizuho downgraded Par Pacific's stock rating from Outperform to Neutral, citing concerns over crack spreads due to new supply factors and planned refinery capacity shutdowns.
The company's profitability in Hawaii, which constitutes about 43% of its total capacity, may be negatively impacted. However, Par Pacific demonstrated strong profitability with a return on equity of 27% and EBITDA of $392 million in the last twelve months.
The company has made strategic financial moves, expanding its term loan credit agreement by $100 million, which brings the total principal balance to $650 million. Par Pacific also announced the upcoming resignation of board member Mr. Anthony Chase, effective November 15, 2024.
In terms of financial performance, Par Pacific reported mixed results for the third quarter of 2024, with an adjusted EBITDA of $51 million and an adjusted net loss of $0.10 per share. Despite a slight decline in same-store fuel volumes, the company achieved a record refining throughput of 198,000 barrels per day and a 3.8% increase in merchandise sales.
Looking to the future, Par Pacific plans to cut its fixed operating expenses by $30 million to $40 million in 2025 to improve market resilience. Furthermore, the company is investing in a Sustainable Aviation Fuel (SAF) project in Hawaii as part of its strategic growth initiatives. These are recent developments that reflect the company's focus on operational efficiency, cost reduction, and strategic growth.
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