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PBF Energy Not So Attractive to Wall Street Analysts

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Mar. 20 2018, Updated 10:08 a.m. ET

Analysts’ ratings for PBF Energy

In the previous part of this series, we looked at analysts’ ratings for Phillips 66 (PSX). Now let’s look at analysts’ ratings for PBF Energy (PBF).

The analyst rating graph above shows that five (or 29%) of the 17 analysts covering PBF have rated it a “buy” in March 2018. Eight analysts (or 47%) have rated it a “hold.” The remaining four (or 24%) have rated it a “sell.” Compared to March 2017, analysts’ ratings for PBF have weakened. In March 2017, it had more “buy” ratings and fewer “sell” ratings. Its mean price target of $37 per share implies a 19% gain from its current level.

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PBF’s peers Delek US Holdings (DK), Andeavor (ANDV), and Marathon Petroleum (MPC) have higher “buy” ratings at 86%, 81%, and 75%, respectively. Valero Energy (VLO) has 45% “buy” ratings. Peers with lower “buy” ratings include Phillips 66 (PSX) and HollyFrontier (HFC), which have been rated a “buy” by 35% and 26% of analysts, respectively.

Why the lower ‘buy’ ratings for PBF?

PBF Energy (PBF) has enhanced its refining capacities as well as its logistics capabilities with acquisitions in the past few years. It acquired the Chalmette refinery, which expanded PBF’s commercial footprint in PADD 3. PBF also acquired the Torrance refinery from ExxonMobil (XOM), which provided a strong foothold in PADD 5. PBF is spending on enhancement and turnaround projects at both refineries to improve the returns. PBF’s midstream MLP, PBF Logistics (PBFX), is expanding through dropdowns.

However, PBF is reeling under the huge RIN (Renewable Identification Number) burden. PBF is the second refiner in this series with strong growth prospects that hasn’t been in favor with analysts, likely due to its RIN burden. The other one is Valero Energy (VLO). In 2017, PBF incurred $294 million in RIN costs compared to $348 million in 2016. The costs vary due to volatile RIN prices and the actual volumes blended.

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