On Tuesday, Wells Fargo made an adjustment to the price target for Delek US Holdings, Inc. (NYSE:DK), reducing it to $26.00 from the previous $31.00, while the Underweight rating on the stock was maintained. The revision follows a detailed analysis of the company's first-quarter results for 2024 and updated projections for various financial metrics.
The firm's analyst highlighted that the lower price target is a result of modeling adjustments which take into account the latest quarterly results and revised assumptions about refining margins, operational expenses, and throughput guidance. According to the analyst's statement, the refining margins at Delek's Tyler location are anticipated to be higher, which will be somewhat negated by decreased margins at the Big Spring location.
The unchanged assumptions regarding refining operational expenses, corporate expenses, and interest expense/depreciation & amortization are in alignment with the company's provided guidance. Despite these consistent factors, the updated Sum of the Parts (SOTP)-based price target has been set at $26.
The analyst also provided new estimates for the company's earnings per share (EPS) for the second quarter and the full year of 2024. The updated EPS forecast for Q2'24 is now $0.86, a slight decrease from the previous estimate of $0.87.
For the full year of 2024, the EPS estimate has been slightly increased to $1.02 from the earlier forecast of $1.00. These adjustments offer a glimpse into the firm's expectations for Delek's financial performance in the upcoming quarters.
InvestingPro Insights
In light of Wells Fargo's recent price target adjustment for Delek US Holdings, Inc. (NYSE:DK), it is worth considering the latest data and insights from InvestingPro. The company's market capitalization stands at approximately $1.76 billion, reflecting the scale of its operations within the industry. Despite a challenging environment, analysts predict that Delek will become profitable this year, which could signal a turning point for the company's financial health.
InvestingPro Tips suggest that while there is an anticipated decline in sales for the current year, the valuation implies a strong free cash flow yield, which may be appealing to investors looking for potential cash-generating investments. Additionally, Delek is trading at a low revenue valuation multiple, which could indicate that the stock is undervalued relative to its revenue generation capability.
InvestingPro provides further analysis and tips on Delek US Holdings, including additional insights that could guide investors in making a well-informed decision. For those interested in a deeper dive, there are 7 more InvestingPro Tips available, which can be accessed with a subscription. Users can benefit from an additional 10% off a yearly or biyearly Pro and Pro+ subscription by using the coupon code PRONEWS24.
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