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How Wall Street Analysts Rate HFC following Its Earnings

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May. 3 2019, Published 3:19 p.m. ET

Analysts’ ratings for HollyFrontier following its earnings results

Seventeen Wall Street analysts have rated HollyFrontier (HFC) in the wake of its first-quarter earnings results. Of these analysts, three (or 18%) have given it “buy” or “strong buy” ratings, 11 (or 65%) have given it “holds,” and three have given it “sells” or “strong sells.”

Following HFC’s earnings release, JPMorgan Chase lowered its target price on HollyFrontier stock from $59 to $57. HollyFrontier’s mean target price of $59 represents a potential upside of 28% from its current level.

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Why many analysts call HFC a “hold”

Many analysts are likely calling HollyFrontier a “hold” due to its earnings growth prospects. Analysts expect the company’s earnings to fall 26% in 2019, likely due to the expectation of weakness in its refining earnings and lower lubricant earnings in 2019 driven by narrowing oil spreads and weakening base oil cracks.

The Canadian oil spread and the Midland spread narrowed in the first quarter. The Canadian differential narrowed due to production cuts implemented by the Government of Alberta and the Gulf Coast’s higher demand for heavy crude. The Midland spread narrowed due to a new pipeline coming online. However, HFC is optimistic about the spreads for the remainder of the year.

Base oil cracks are expected to be lower in 2019, which could affect HFC’s lubricant earnings.

Analysts’ ratings for other refiners

HollyFrontier’s peers Marathon Petroleum (MPC) and Delek US Holdings (DK) have been rated as “buys” by 100% and 47% of analysts, respectively. Other downstream players PBF Energy (PBF), Valero Energy (VLO), and Phillips 66 (PSX) have been rated as “buys” by 44%, 74%, and 67% of analysts, respectively.

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