Delek US stock price target raised to $27 from $23 at Mizuho

Investing.com - Mizuho (NYSE:MFG) raised its price target on Delek US (NYSE:DK) to $27.00 from $23.00 on Thursday, while maintaining an Outperform rating on the stock. The target comes as Delek trades near its 52-week high of $24.69, having posted impressive YTD returns of about 36%.

The research firm expects Delek US to post slight misses versus current consensus earnings estimates, with EBITDA and EPS coming in 3% and 8% below expectations, respectively. According to InvestingPro data, the company’s financial health metrics raise concerns, with negative EBITDA of -$21.2M and a high debt-to-equity ratio of 21.69.

Mizuho noted improvements in Delek’s refining segment due to higher crack spreads and highlighted the continued progress of the company’s Enterprise Optimization Plan, which currently focuses on improvements at the El Dorado facility.

The firm also pointed to the ongoing Midstream deconsolidation as part of Delek’s sum-of-the-parts (SOTP) efforts as a positive factor in its analysis.

Mizuho identified a potential upcoming decision on Small Refinery Exemptions by the EPA as an important catalyst for Delek US, noting the company has substantial claims relative to its market capitalization.

In other recent news, Delek Logistics (NYSE:DKL) Partners announced plans to offer $500 million in senior notes due 2033 through a private placement to qualified institutional buyers. The proceeds are intended to repay a portion of its outstanding revolving credit facility borrowings. Meanwhile, Delek US Holdings has faced several downgrades from rating agencies. Fitch Ratings downgraded Delek US Holdings’ Issuer Default Rating to ’B+’ from ’BB-’, citing elevated leverage and increased business risk. Moody’s Ratings also downgraded Delek US Holdings’ Corporate Family Rating to B1 from Ba3, pointing to weak credit metrics and high gross debt. On the analyst front, JPMorgan reduced Delek US Holdings’ stock price target to $19, maintaining a Neutral rating, while Mizuho upgraded the stock to Outperform with a new price target of $23. Mizuho’s upgrade was based on anticipated improvements in U.S. refining fundamentals and a projected increase in natural gas prices. These developments highlight the mixed outlook and ongoing strategic efforts at Delek US Holdings.

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