Delek U.S. (DK) Stock Rating Downgraded at JPMorgan

Delek U.S. (DK) stock rating was lowered to 'neutral' at JPMorgan this morning as a result of balance sheet concerns and a negative sector outlook.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of Delek U.S. (DK) - Get Report are up 0.17% to $12.76 in late-afternoon trading as JPMorgan downgraded the company's rating to "neutral" from "overweight" this morning. 

The firm lowered the price target for the Franklin, TN-based downstream energy company to $12 from $17. 

Delek is expected to acquire the rest of Alon USA Energy (ALJ), which the firm calls "a good match with DK's existing footprint," the firm said in the analyst note.  

But some investors are concerned about Delek Holdings' "balance sheet in case the current macro environment persisted," according to Benzinga. 

Additionally, the fiscal 2016 second quarter estimates for the sector have been reduced "as cracks softened in the final weeks of 2Q and capture rates (e.g., tight crude diffs, rising RINs) now look even more negative than we thought q/q," JPMorgan wrote. 

The firm lowered EPS estimates for Delek for the second quarter and for 2016 to $0.25 from $0.30, and to $2 from $2.30, respectively. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate DELEK US HOLDINGS INC as a Hold with a ratings score of C-. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its generally strong cash flow from operations. At the same time, however, we also find weaknesses including a generally disappointing performance in the stock itself, feeble growth in the company's earnings per share and poor profit margins.

You can view the full analysis from the report here: DK

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