UPDATE: Deutsche Bank Downgrades Northern Tier Energy to Hold on Valuation, Seasonality

Deutsche Bank reduced its rating on Northern Tier Energy

from Buy to Hold. Deutsche Bank said, "Variable payout Mid Con refining MLP Northern Tier (NTI) reported clean earnings of $1.42/unit vs DBe at $1.43 and consensus of $1.64. The excellent quarterly profitability implies exceedingly cheap valuation, so that quarterly adjusted EBITDA of $250m represents annualized EV/EBITDA of 2.2x, while the $1.48/unit distribution for only 2 months since the IPO implies 35% annual yield. However, we see a seasonal sequential decline in earnings in Q4 followed by typically-weak Q1 and costly turnarounds, and on a normalized mid-cycle distribution basis the stock looks fully valued. We are in a cyclical short term negative stance on refining." Northern Tier Energy closed at $24.50 on Tuesday.