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Is HollyFrontier Analysts’ Least Favorite Stock?

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Analysts’ ratings for HollyFrontier

Analysts’ ratings for HollyFrontier (HFC) show that three (or 18%) out of 17 have rated it as a “buy” in June. Another 11 analysts (or 65%), the majority, have rated HollyFrontier as a “hold.” The remaining three analysts call it a “sell.”

Thus, HollyFrontier has the fewest “buy” ratings among its peers. Marathon Petroleum (MPC) has the most “buy” ratings at 94% followed by Valero Energy (VLO) and Phillips 66 (PSX) at 84% and 72%, respectively. PBF Energy (PBF) and Delek US Holdings (DK) have mixed opinions from analysts, with 50% and 47% “buy” ratings, respectively.

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HollyFrontier has also seen target price cuts recently. Cowen and Company has reduced its target price on HFC from $55 to $49, and JPMorgan Chase has cut its target price on the stock from $52 to $49. HFC’s mean target price of $56 per share implies a potential upside of ~27% from its current level.

Why has HollyFrontier received mixed ratings?

Wall Street analysts expect HFC’s earnings to fall in 2019 due to lower oil spreads, which could result in lower refining margins and earnings for the company. Its Lubricant segment, which it’s been expanding for the past couple of years, is expected to face weaker base oil cracks in 2019, which 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 the company’s profits in 2019. Analysts expect HFC’s earnings to fall 29% in 2019.

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

Analysts hold mixed opinions on HFC likely due to its healthy financials offset by its low earnings outlook.

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