PBF’s analysts’ ratings
In the last part of the series, we looked at PBF Energy’s (PBF) stock performance. In this part, we’ll examine the ratings by analysts covering the stock.
PBF Energy’s analyst ratings show that 69% of surveyed analysts covering the stock rate it as a “buy.” Around 23% rate it as a “hold.” The highest 12-month price target for PBF stands at $49, indicating a 65% rise from its current levels.
Around 8% of analysts rate PBF as a “sell.” Still, the lowest price target of $35 implies an 18% rise. The average 12-month price target for PBF stands at $44, indicating a 48% rise from its current levels.
PBF’s peers Western Refining (WNR), HollyFrontier (HFC), and CVR Refining (CVRR) have been rated as “buys” by 50%, 39%, and 14% of analysts, respectively. For exposure to refining sector stocks, investors can consider the Vanguard Energy ETF (VDE), which has ~11% exposure to the sector.
PBF boosts growth via acquisitions
PBF Energy’s acquisition spree is expected to enhance its refining capacities as well as its logistics capabilities. To fund its acquisitions, PBF has raised $344 million by issuing equity. Plus, the company plans to raise $500 million by offering senior secured notes.
The company acquired the Chalmette refinery and related logistics assets in November 2015 for $322 million plus working capital. The Chalmette refinery’s output is 189,000 barrels per day. It’s a high-complexity refinery, which is expected to enhance PBF’s commercial footprint in PADD 3. Its logistics assets offer strong connectivity across the region. Also, it provides potential drop-down opportunities with PBF Logistics (PBFX).
PBF signed an agreement to purchase the Torrance refinery from ExxonMobil (XOM) for $537.5 million plus working capital that will be valued at closing. The acquisition is expected to close in 2Q16. The refinery’s output is 155,000 barrels per day. It’s a high-complexity refinery, which is expected to provide a strong foothold in PADD 5. The Torrance refinery has sophisticated southern Californian logistics assets that are expected to provide transaction opportunities with PBFX.