Winners & Losers
Analyst Lowers Holly '09 EPS View On Dim Outlook
The Associated Press
05/12/09 - 12:14 PM EDT
NEW YORK (AP) Despite Holly Corp.'s strong first-quarter results, a continued deterioration in demand and challenging industry fundamentals will pressure the petroleum refiner, an analyst said as she lowered her profit estimate for the company.
Shares of the company tumbled 99 cents, or 3.9 percent, to $24.16 in midday trading.
Last week, Holly posted a first-quarter profit well above Wall Street expectations, crediting lower crude oil costs for boosting margins and offsetting weaker volumes.
Net income jumped to $21.9 million, or 44 cents per share, compared with $8.6 million, or 17 cents per share, in the year-earlier period. Revenue fell to $650.8 million from $1.48 billion.
Analysts surveyed by Thomson Reuters expected, on average, a profit of 30 cents per share on revenue of $590.5 million.
Caris & Co. analyst Ann Kohler said demand declines, continued contraction in the crude price spread the difference between heavy and light crude prices and contango in the crude market will make for a challenging refining environment in the second half of the year.
Kohler praised the company's impending acquisition of Sunoco's Tulsa, Okla., refinery, but she said the constrained price spread between light and heavy crude will hurt the refinery's economics in the near term. Sunoco sold the refinery to Holly for $65 million dollars.
Kohler rates Holly "Below Average" and cut her 2009 profit estimate for Holly to $2.20 per share, down from $2.25 per share. Wall Street expects a profit of $2.54 per share.