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

Deutsche Bank reduced its rating on Northern Tier Energy (NYSE: NTI) 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.

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