Mizuho cuts PBF Energy stock price target to $22 from $28

On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on PBF Energy (NYSE:PBF) shares, reducing the price target from $28.00 to $22.00 while maintaining an Underperform rating. The revision reflects Mizuho’s anticipation of PBF Energy’s first-quarter performance falling short of market expectations. According to InvestingPro data, the company’s stock has declined over 66% in the past year, currently trading at $19.09. The firm predicts that the company will report lower earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) compared to the current consensus.

The expected shortfall is attributed to several factors, including a weaker gross margin due to operational outages, increased operational expenses stemming from repair costs at the Martinez facility, and reduced volumes. InvestingPro data reveals concerning trends, with gross profit margins at just 1.11% and eight analysts recently revising their earnings expectations downward. Mizuho analysts highlighted that the narrow crude differentials, particularly for Western Canadian Select (WCS), suggest limited discounts for heavy and medium sour crude grades, which adversely affects complex coastal refiners like PBF Energy.

The reduction in the net asset value (NAV)-based price target to $22.00 per share is a response to both company-specific operational challenges, such as the outage on the West Coast, and a dimmer market outlook in the near term. Mizuho’s stance on PBF Energy remains cautious, as indicated by the reaffirmed Underperform rating.

PBF Energy’s stock performance will be closely monitored by investors as the market digests this updated financial guidance from Mizuho. The company’s upcoming quarterly results will provide further insight into the impact of the operational and market challenges outlined by the analysts.

In other recent news, PBF Energy has announced a plan to offer $750 million in senior notes through its subsidiary, PBF Holding Company LLC. The proceeds from this offering are intended to reduce debt under the company’s revolving credit facility and for general corporate purposes. Meanwhile, PBF Energy is planning a phased restart of its Martinez, California refinery, which was shut down due to a fire. The company expects some units to resume operations in the second quarter of 2025, with full operations anticipated by the fourth quarter of the same year.

In analyst updates, UBS has lowered its price target for PBF Energy from $26 to $23, maintaining a Neutral rating. This adjustment is attributed to expected increased operating expenses due to the Martinez facility’s downtime. Similarly, JPMorgan has reduced its price target from $35 to $31, citing the impact of the Martinez refinery shutdown and increased net debt. Fitch Ratings has revised the outlook for PBF Holding Company LLC to negative, though it maintained a ’BB’ rating, due to concerns over increased gross debt and potential liquidity strains.

The company is also facing operational challenges, with Fitch noting that the Martinez fire will prevent PBF Energy from capitalizing on the summer driving season, affecting cash flow for 2025. Despite these challenges, PBF Energy expects insurance to cover most repair costs for the Martinez refinery. The company has emphasized its commitment to reducing leverage and maintaining stable dividends, supported by funds from PBF Logistics (NYSE:PBFX).

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