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PBF Energy's Eye-Catching Earnings Miss Due Largely To Impact Of Acquisition

PBF Energy's Eye-Catching Earnings Miss Due Largely To Impact Of Acquisition - PBF

Shares of PBF Energy Inc PBF 3.52% would likely not be impacted by the company’s EPS miss, Barclays’ Paul Y. Cheng said in a report. He maintained an Equal Weight rating on the company, with a price target of $26.

PBF Energy reported its quarterly EPS at $0.14, significantly short of the consensus estimate of $0.21. Analyst Paul Cheng noted, however, that there was an impact of $6mn, or $0.06 per share, related to the closing of the Torrance acquisition. Without this, the result would be relatively in-line with expectations.

Investor Focus

Cheng enumerated three themes on which investors were likely to focus during the company’s call:

  1. The 2H guidance implying significant economic run cuts
  2. Positive commentary on planned self-help initiatives
  3. Chalmette margin compression, offset by self-help initiatives.

LT Perspective

“Essentially, we view the positive commentary around long-term improvements as offsetting the negative impact of the economic run cuts and poor 2Q results at Chalmette,” the analyst wrote.

While the run cuts could exert pressure on PBF Energy’s shares, the long-term outlook appears “incrementally positive,” with a number of self-help initiatives being planned “on a manageable ~$500 mn/yr capital budget,” Cheng commented.

The EPS estimates for FY1 and FY2 have been reduced from -$0.40 to -$1.15 and from $0.60 to $0.45, respectively.

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DateFirmActionFromTo
Jul 2016JP MorganDowngradesOverweightNeutral
Jun 2016Goldman SachsDowngradesBuyNeutral
Jun 2016JP MorganMaintainsOverweight

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