UPDATE: J.P. Morgan Initiates Coverage on CVR Refining Ahead of Expected Sharp Decline

In a report published Thursday, J.P. Morgan analyst Jeremy Tonet initiated coverage on

with a Neutral rating and $26.00 price target. In the report, J.P. Morgan noted, “We are initiating coverage of CVR Refining with a Neutral rating and a year-end 2014 price target of $26/unit. CVRR is benefiting from the substantial strength in refining margins resulting from increased Western Canadian Sedimentary Basin and Mid-Continent production, combined with limited transportation options for these landlocked crudes. Furthermore, CVRR's growing logistics asset base accentuates these favorable crack spreads. In addition, CVRR enjoys favorable refined product supply/demand fundamentals as PADD II (where CVRR is located) is typically short product, requiring imports for PADD II and creating an incremental transportation premium in CVRR's margins.” CVR Refining LP closed on Wednesday at $26.03.