HollyFrontier: Lowest Ranking from Analysts


The following graph shows that three (or 18%) of the 17 analysts covering HollyFrontier (HFC) recommended a “buy,” 11 analysts (or 65%) recommended a “hold,” and three (or 18%) analysts recommended a “sell” in April.

HollyFrontier’s mean target price of $60 per share implies an ~19% gain from the current level. Recently, JPMorgan Chase lowered its target price on HollyFrontier stock from $63 to $59.

HollyFrontier: Lowest Ranking from Analysts

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Mixed ratings

Analysts expect HollyFrontier’s earning to fall in 2019 due to lower refining cracks and spreads, which could result in lower refining margins and earnings for the company. HollyFrontier’s lubricant segment, which the company has been expanding in the past few years, is expected to face weaker base oil cracks in 2019. The weaker base oil cracks could lead to lower Rack Back lubricant earnings for the company. Lower refining earnings and weaker Rack Back earnings could lead to a fall in HollyFrontier’s profits in 2019. Analysts expect HollyFrontier’s earnings to fall 21% in 2019.

However, the company has strong financials to continue its expansion spree. HollyFrontier had a comfortable debt position and a surplus cash flow situation in 2018.

Analysts have mixed opinions about HollyFrontier due to its healthy financials and lower earnings outlook.

Refiners’ ratings

Analysts’ top pick is Marathon Petroleum (MPC) with 100% “buy” ratings. The “buy” ratings are likely due to rising synergies and the expectation of improved earnings. Valero Energy (VLO) and Phillips 66 (PSX) have 74% and 67% “buy” ratings, respectively. Valero Energy’s growth activities and Phillips 66’s strong earnings model likely led to the higher “buy” ratings.

PBF Energy (PBF), Delek US Holdings (DK), and HollyFrontier (HFC) have lower “buy” ratings at 44%, 53%, and 18%, respectively.