On Friday, PBF Energy Inc. (NYSE:PBF) experienced a downgrade in its stock rating by TD Cowen, shifting from a Hold to a Sell status. Alongside the downgrade, the firm also reduced the price target for PBF Energy from the previous $27.00 to $20.00. The stock, currently trading at $25.46, has declined about 41% over the past six months and is hovering near its 52-week low of $25.43. According to InvestingPro data, seven analysts have recently revised their earnings expectations downward for the upcoming period.
The downgrade was influenced by PBF Energy's performance, which has been noted as producing the lowest refining results per barrel among its peers over the last 18 months. The analyst pointed out that the company's high-cost refining system, when paired with the current weak light/heavy differentials, poses a significant challenge for its operational configuration.
InvestingPro analysis reveals concerning fundamentals, including a weak gross profit margin of 1.75% and negative returns on invested capital. Get access to 12+ additional ProTips and comprehensive financial metrics with an InvestingPro subscription.
TD Cowen's analysis anticipates further difficulties for PBF Energy due to its substantial exposure to the West Coast market. This is expected to be a disadvantage continuing through 2025, as the region faces a rise in renewable diesel imports coupled with a persistent decline in gasoline demand. The market's concerns are reflected in the stock's technical indicators, with InvestingPro data showing the RSI in oversold territory.
The analyst's statement highlighted the unfavorable conditions that PBF Energy is likely to encounter: "Its high cost refining system combined with weak light/heavy diffs creates a challenging environment for its configuration." This assessment reflects the firm's view on the company's near to mid-term economic prospects within the industry.
PBF Energy's stock adjustment reflects TD Cowen's outlook on the company's potential performance against the backdrop of industry-specific challenges and market dynamics.
The revised price target of $20.00 represents a significant decrease from the previous target, setting a new expectation for the company's market valuation.
In other recent news, PBF Energy has seen a series of significant developments.
Mizuho (NYSE:MFG) Securities has downgraded PBF Energy's stock from Neutral to Underperform, citing expected weaker refining margins. The firm has also revised its price target for PBF Energy, reducing it from $33 to $31. This revision comes in light of PBF Energy's recent financial performance, which showed a revenue decline of 12.8% over the last twelve months and weak gross profit margins of 1.75%.
In addition to the downgrade, PBF Energy reported a challenging third quarter in 2024, with an adjusted net loss of $1.50 per share and an adjusted EBITDA loss of $60.1 million. Despite these losses, the company announced a 10% increase in its dividend, demonstrating confidence in its financial stability.
Moreover, PBF Energy has announced changes in executive compensation, including long-term incentive awards for their named executive officers. These awards include restricted shares of Class A common stock, performance share units, and performance units with payouts contingent on the company's total shareholder return rankings relative to its peers from January 1, 2025, through December 31, 2027.
Lastly, PBF Energy has revealed its plans for capital expenditures for 2025 to be between $750 million to $800 million, and is targeting $200 million in run rate cash savings by the end of 2025.
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