UPDATE: Citigroup Downgrades HollyFrontier to Sell on Valuation

In a report Monday, Citigroup analyst Faisel Khan downgraded HollyFrontier

from Neutral to Sell while price target remains at $40. Khan noted in the report, “Our recommendation is purely an outcome of our valuation analysis.” Citigroup highlighted Wider Group 3 and Rockies Basis as potential headwind, “HFC serves these regions where the seasonality in product prices between winter and summer months has been more pronounced. Some of this is a result of more Gulf Coast products migrating into the Mid-continent as a result of higher utilization rates and limited export outlets for gasoline.” They also noted current gap in valuation between Mid-continent and Gulf Cost refineries will narrow due to migration of crude glut. HFC closed Friday at $49.36 and is currently trading at $49.17.