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PBF Energy Downgraded At Goldman On RINs Concerns

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PBF Energy Downgraded At Goldman On RINs Concerns
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Given that PBF Energy Inc (NYSE: PBF) does not have a retail or wholesale segment, Goldman Sachs’ Neil Mehta expects the company to be “disproportionately negatively impacted” by expectations of higher RINs prices.

Mehta downgraded the rating on the company from Buy to Neutral, while lowering the price target from $37 to $26.

RINs Concerns

“While PBF continues to trade at a discount to its SOTP, we lower our rating from Buy to Neutral to reflect the negative impact of higher RINs prices as well as the lack of business diversification beyond core refining,” the analyst explained.

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Mehta pointed out that several factors had been adversely impacting the broader refining segment since November, including the crude export ban being lifted, higher product inventories and concerns regarding RINs prices.

The analyst expects RINs prices to increase from $172 million in 2015 to $300 million in 2017.

Pressure On Stock

“Specific to PBF, outages at the Delaware City refinery and ongoing issues with returning Torrance to service have contributed to the pressure on the shares,” Mehta said.

Over the past year, the company has struggled with operational issues, such as the unplanned downtime at Toledo and at Delaware City.

Although there is potential for operational performance improvements at PBF, Mehta believes the stock could continue to trade at a discount to peers until investors can see more evidence of such improvement.

The 2016–2018 EPS estimates have been lowered to reflect the updated capture rate assumptions and expectations of higher RINs expenses.

Latest Ratings for PBF

DateFirmActionFromTo
Apr 2017Goldman SachsUpgradesSellNeutral
Feb 2017Morgan StanleyDowngradesOverweightEqual-Weight
Nov 2016Wolfe ResearchUpgradesPeer PerformOutperform

View More Analyst Ratings for PBF
View the Latest Analyst Ratings

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