PBF Energy's Remarkable Rise: Analyst Highlights Transition From No Assets To Leader In Refining Upcycle

BMO Capital Markets analyst Phillip Jungwirth initiated coverage on PBF Energy Inc PBF with an Outperform rating and a price target of $60. 

The analyst thinks PBF has benefited the most during the refining upcycle, erasing elevated financial leverage seen during COVID.

Also, the analyst sees improvement in PADD 1 and 5 markets from refinery closures and conversions.

The analyst notes massive development in the company (from no assets to approximately 1 million barrels per day of processing capacity) and is pleased with the negative net debt position, thereby aiding it in returning significant capital to shareholders.

The analyst estimates EPS of $11.26 (6% below consensus) in FY23 and $7.25 (4% below street view) in FY24. 

Jungwirth expects refining margins to remain above mid-cycle in 2024, supporting strong FCF generation and capital returns.

The analyst sees a pre-working capital FCF of $1.1 billion in FY23 and $0.8 billion in FY24. He expects FCF to support a dividend and buyback yield of 11.2% and 13.3% in FY23 and FY24, respectively. 

Also Read: Bank Of America Says A Strategic Pause Is Necessary For The US Refiners - Here's Why

Price Action: PBF shares are trading higher by 1.06% at $46.13 on the last check Thursday.