Mizuho cuts HF Sinclair stock target, keeps neutral rating

On Wednesday, HF Sinclair Corporation (NYSE: DINO) saw its price target adjusted by Mizuho, with the firm setting a new target of $55, down from the previous $61, while maintaining a Neutral stance on the stock.

The adjustment was made in anticipation of a second-quarter performance that may not meet current consensus expectations, despite the company's refining operations performing well.

The forecast by Mizuho suggests that HF Sinclair might experience significant misses in earnings before interest, taxes, depreciation, and amortization (EBITDA), free cash flow (FCF), and earnings per share (EPS) for the second quarter of 2024.

The predicted shortfalls are 24%, 44%, and 60%, respectively, compared to the consensus. These expected misses are attributed mainly to challenges in the refining segment, which has faced issues similar to its industry peers, including lower margin capture due to less favorable crude differentials and weaker secondary product markets.

Despite these challenges, HF Sinclair's secondary businesses demonstrated relative stability compared to the first quarter of 2024. However, the retail segment did encounter some headwinds, particularly from diesel margins.

On a more positive note, the Renewable Diesel segment is anticipated to report a smaller loss as utilization rates improved, helping to balance out some of the impacts from declining pricing in the sector.

Mizuho's revised price target is based on a net asset value (NAV) approach. The firm reiterated its Neutral rating on HF Sinclair shares, signaling a cautious outlook on the stock's immediate future performance. The revised price target reflects the firm's updated assessment of the company's value in light of the anticipated second-quarter results.

In other recent news, HF Sinclair Corporation reported solid first-quarter results, with a net income of $315 million and an adjusted net income of $142 million. The company also announced a new $1 billion share repurchase authorization and maintained a regular quarterly dividend of $0.50 per share.

However, Mizuho Securities and Piper Sandler both adjusted their price targets for HF Sinclair shares, citing changes in the energy market and the company's financial outlook. Mizuho Securities reduced its price target to $61.00 from $64.00, while Piper Sandler lowered its target to $58.00 from $65.00.

In terms of corporate changes, HF Sinclair's Vice President, Controller, and Chief Accounting Officer, Indira Agarwal, has stepped down, with CFO Atanas H. Atanasov taking over her responsibilities until a permanent replacement is found. These recent developments provide valuable insights into HF Sinclair's financial health and strategic direction.

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