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On Friday, TD Cowen adjusted its outlook on Par Petroleum (NYSE: PARR), reducing the stock's price target to $32 from $36, while reaffirming its Buy rating. The revision follows the company's recent financial performance which surpassed estimates and included a significant share repurchase in the second quarter of 2024.
The company's record repurchase amounted to $66 million in shares during the second quarter. Looking ahead, Par Petroleum is expected to conduct a minor turnaround at its Billings facility in the third quarter of 2024. Despite this, TD Cowen anticipates a relatively stable second half of the year for the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) compared to its peers.
TD Cowen's outlook suggests that Par Petroleum's financial health is bolstered by several factors, including the company's diesel production leverage, consistent asset availability, and a shrinking margin spread between the United States and Asia. These elements are expected to provide a buffer against potential downturns.
However, the firm predicts that share buybacks will decrease in the latter half of the year, with the full-year 2024 yield on buybacks projected to be around 11%. Despite the anticipated reduction in share repurchase activity, TD Cowen continues to regard Par Petroleum as a top pick within the sector.
In other recent news, Par Pacific Holdings (NYSE:PARR), Inc. has reported its Q2 2024 financial results, revealing an adjusted EBITDA of $82 million and an adjusted net income of $0.49 per share. The company has shown strength in its retail operations, gaining market share, and advancing growth initiatives, particularly in Billings and renewable projects in Hawaii. Par Pacific's financial health remains robust, with a strong balance sheet and significant stock repurchases, emphasizing its commitment to shareholder value.
The company is anticipating continued modest restocking of inventories and near mid-cycle margin levels. The company plans to invest approximately $120 million in turnaround work in Billings over the next four to five years. However, the company acknowledges challenges in the West Coast margin environment due to competition from renewable diesel and petroleum diesel exports.
InvestingPro Insights
As Par Petroleum (NYSE: PARR) navigates a dynamic market environment, InvestingPro data and insights provide a deeper understanding of the company's current financial standing. With a market capitalization of $1.43 billion and trading at a low revenue valuation multiple, Par Petroleum exhibits a compelling P/E ratio of 3.05, suggesting that the stock may be undervalued relative to its earnings.
InvestingPro Tips highlight that despite analysts' expectations of a net income drop this year, the company has been profitable over the last twelve months. This profitability, coupled with a robust revenue growth of 19.45% in the last twelve months as of Q2 2024, underscores Par Petroleum's financial resilience. However, the company's gross profit margins appear weak at 14.49%, which may warrant investor attention.
For those considering a deeper dive into Par Petroleum's financials, InvestingPro offers additional insights. There are a total of 7 InvestingPro Tips available, including details on earnings revisions and stock price volatility, which can be found at https://www.investing.com/pro/PARR. These tips are designed to guide potential investors in making more informed decisions regarding Par Petroleum's stock.
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