UPDATE: Credit Suisse Downgrades Northern Tier Energy Following Refiners Review

In a report published Wednesday, Credit Suisse analyst Edward Westlake downgraded Northern Tier Energy NTI from Outperform to Neutral, but reiterated the $28.00 price target.

In the report, Credit Suisse noted, “In January's Great LLS Debate we felt refiner profitability would decline in 2013 due to narrowing WTI-Brent and that it would take some time for stress in Gulf coastal crude markets to widen WTI-Brent back out. In early April we said “Take Some Profits, Downgrading PBF”. To avoid WTI-Brent we've been hiding out in coastal names with catalysts (e.g. MPC) and arguing logistic value would provide some support. After a VLO call, where management continued to position RINs as a large 2014 hurdle and seemed less optimistic about Gulf Coast crude discounts until 2015, we cut our EBITDA estimates to more closely reflect this reality. EBITDA falls 9% for 2013, 21% for 2014. Investors are likely already using lower EPS than the sell-side. Being 20% below 1Q consensus back in April, 20% below Q2 consensus back in March and, after today's cuts, 20% below 3Q EBITDA consensus holds no prizes. RINs add another level of significant uncertainty for certain names unless legislation changes. There is value in select names (MPC, PSX, DK, WNR) but a need for some valuation or EPS caution in others (PBF, ALJ, VLO, the variable rate refiner MLPs) given limited valuation support and RINs risk (until legislation changes). We downgrade both ALDW and NTI to Neutral from Outperform.”

Northern Tier Energy closed on Tuesday at $25.19.