On Thursday, BofA Securities resumed coverage on PBF Energy, assigning an Underperform rating to the stock with a new price target of $25.00. The firm’s analyst noted that PBF Energy operates predominantly in Refining, accounting for 80% of its business, with the remaining 20% in Logistics. PBF Energy is characterized as a “purest play refiner,” with nearly all its Logistics services dedicated to supporting its refineries.
The BofA Securities analysis highlighted the volatility of PBF Energy’s stock, which has historically been sensitive to refining margins, or refining cracks. The analyst anticipates an extended period of decline in these margins. Additionally, the report mentioned that about half of PBF’s refineries are in the bottom quartile for performance. Most of these refineries are located in the PADD1/2/5 markets, which have a lower duration, potentially affecting the longevity and profitability of the company’s operations.
Despite the stock being priced lower than its peers, the BofA Securities analyst attributed this lower valuation to the inherent value of the company’s shorter-life refineries, rather than viewing it as an investment opportunity. The new price target reflects caution regarding the stock’s future performance.
Other recent news on PBF Energy includes various analyst reviews. Citi revised its price target to $37.00, expecting a trend towards the lower end of the company’s cash balance target of $1-$1.5 billion and projecting a third-quarter loss of $1.33 per share, a more pessimistic outlook compared to consensus estimates.
BMO Capital Markets downgraded PBF Energy from Outperform to Market Perform, citing its status as a higher-cost refiner potentially facing tighter margins. The firm set a revised price target at $35.00. Another financial firm maintained an Underweight rating, with a stable price target of $25.00, following a revision of PBF’s third-quarter earnings forecasts.
JPMorgan downgraded the stock from Overweight to Neutral, reducing the price target to $40.00 and suggesting that investors might favor larger-cap refiners in the current market climate. Similarly, Piper Sandler downgraded PBF Energy to ‘Underweight’, expressing concerns over future financial performance and setting a new price target of $25.00.
Despite these challenges, PBF Energy has made progress in reducing debt and strengthening its balance sheet. The company plans to double its production from the Trans Mountain Expansion pipeline by year-end and remains optimistic about the medium- to long-term prospects of its renewable diesel operations. These moves highlight PBF Energy’s strategic efforts to address regional supply deficits and boost production.
InvestingPro Insights offer additional context to the BofA Securities’ analysis, noting that PBF Energy’s P/E ratio of 5.03 and Price to Book ratio of 0.61 from the last twelve months indicate the stock is trading at a relatively low valuation. However, despite a gross profit of $2.1 billion, the company’s gross profit margin is modest at 5.66%, contributing to analysts’ concerns, particularly with half of its refineries in the bottom performance quartile.
InvestingPro Tips indicate significant share buybacks by management, interpreted as a positive signal for the company’s future. Nonetheless, 11 analysts have revised their earnings downward, in line with the anticipated refining crack decline mentioned by BofA Securities. InvestingPro offers additional insights for those seeking a more comprehensive analysis of PBF Energy’s financial position and market performance.
This report was generated with the support of AI and reviewed by an editor.