Soleil Analyst Downgrades Western Refining

SIOUX FALLS, S.D. (AP) — A Soleil Securities Corp. analyst downgraded Western Refining Inc. Tuesday on concerns that the independent refiner may break debt covenants in the first quarter of 2010 because of upcoming weak quarterly earnings.

Analyst Jacques Rousseau downgraded the stock to "Hold" from "Buy" and dropped his price target to $8 from $10.

Shares lost 30 cents, or 4.4 percent, to $6.47 in afternoon trading.

Rousseau said Western will likely look into issuing additional long-term high yield debt this year to pay off its term loan and avoid breaking debt covenants, but that would result in higher interest expense.

The firm reduced its third-quarter earnings estimate from flat to a loss of 10 cents per share and dropped its full-year 2009 estimate to 65 cents per share from 75 cents per share. Rousseau cited lower-than-expected refining margins this quarter, especially on the East Coast.

Analysts polled by Thomson Reuters expect third-quarter earnings of a penny a share and full 2009 earnings of 65 cents per share.

Soleil also dropped its 2010 earnings estimate to 55 cents per share from 70 cents. The consensus estimate of analysts is 70 cents.