Truist maintains Buy on Delek Logistics, $50 target

On Tuesday, Truist Securities maintained its Buy rating on Delek Logistics Partners, LP (NYSE:DKL) with a steady price target of $50.00. Currently trading at $40.81, the company offers an impressive 10.92% dividend yield and has maintained dividend payments for 13 consecutive years, according to InvestingPro data. The firm’s analysts highlighted the company’s strategic acquisitions in the Permian Basin, which are expected to contribute to significant growth in gathering, processing, wholesale marketing, terminalling, storage, and transportation operations. These additions are seen as a way for Delek Logistics to enhance its margins by offering a comprehensive suite of infrastructure services to its customers in the Permian region.

Delek Logistics, with a market capitalization of $2.19 billion, has been focusing on expanding its asset portfolio in the Permian Basin over the past quarters. The company maintains strong financial health with a current ratio of 1.64, indicating liquid assets exceed short-term obligations. This strategic move is designed to secure future growth in various segments of the oil and gas infrastructure industry. The company’s diverse range of products and services is aimed at meeting the increasing demand for a full-service infrastructure provider in the Permian Basin, which is one of the most prolific oil-producing areas in the United States.

Analysts at Truist Securities estimate that Delek Logistics will experience approximately 20% year-over-year earnings growth. With a P/E ratio of 13.53 and a gross profit margin of 35.6%, the company shows strong profitability metrics. This growth projection is based on the incremental revenue from the newly acquired assets and the organic activity within the company. InvestingPro analysis reveals 8 additional key insights about DKL’s financial health and growth potential, available to subscribers. The firm’s comprehensive approach to expanding its infrastructure offerings is expected to create an economic advantage over its sponsor, Delek US Holdings, Inc. (NYSE:DK).

The price target set by Truist Securities implies confidence in the company’s potential for financial performance, particularly following its recent acquisitions. One such addition mentioned by the analysts is Gravity Water Midstream, which is anticipated to contribute to Delek Logistics’ upside potential. The firm’s analysts have reiterated their favorable outlook on the stock, with analyst targets ranging from $36 to $50. For a comprehensive analysis of DKL’s valuation and growth prospects, investors can access the detailed Pro Research Report available on InvestingPro, which provides in-depth insights into the company’s financial health and market position.

In other recent news, Delek Logistics Partners LP reported its fourth-quarter 2024 earnings, which did not meet analysts’ expectations. The company posted an earnings per share (EPS) of $0.68, falling short of the projected $0.7239, and recorded revenue of $209.86 million, missing the forecasted $253.99 million. Despite these results, the company has been actively pursuing strategic acquisitions and expansions, particularly in the Permian and Delaware Basins. Delek Logistics also announced a 48th consecutive quarterly distribution increase, reflecting a steady commitment to shareholder returns. The company has set an EBITDA guidance of $480-$520 million for 2025, suggesting a potential growth of around 20%. Additionally, Delek Logistics has authorized a $150 million buyback from its sponsor, signaling confidence in its financial health. Analysts from Citi and Truist Securities have shown interest in the company’s strategic initiatives, particularly the Libby processing plant expansion and recent acquisitions. These developments indicate a focus on enhancing future growth prospects despite the recent earnings miss.

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