UPDATE - UBS Initiates Coverage on Holly Corp (HOC) with a Buy; Mid Continent Refining Exposure Still Not Fully Reflected in Shares
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Price: $69.40 --0%
Rating Summary:
6 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
6 Buy, 0 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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UPDATE - UBS initiates coverage on shares of Holly Corp (NYSE: HOC) with a Buy rating. PT $86.
UBS analyst says, "HOC's niche refining footprint in the Rockies, Mid Continent, and SW U.S. looks to be bolstered through the imminent merger with Frontier Oil (NYSE: FTO). We expect this deal to close in July, following shareholder approval on June 28th. Combined the organizations will boast 443 MBbld of refining capacity with access to favourable Mid Continent refining economics. We view Holly as the best stock in our coverage universe to play the light-heavy and WTI-Brent crude differentials."
"Cash on hand looks to reach record levels in 2011 and 2012 - With the expected close of the FTO deal and the potential 4Q11/1Q12 sale of its UNEV pipeline project stake, we estimate HOC’s pro forma cash position will swell to $1.5B (~$14/share) in 2011 and $2.5B ($24/share) in 2012. This begs the question: how will management deploy this cash? We expect management to look internally at synergy oriented projects, but also to consider share buy-backs or a dividend increase. These would likely depend on the company’s profitability through 2H11."
UBS analyst says, "HOC's niche refining footprint in the Rockies, Mid Continent, and SW U.S. looks to be bolstered through the imminent merger with Frontier Oil (NYSE: FTO). We expect this deal to close in July, following shareholder approval on June 28th. Combined the organizations will boast 443 MBbld of refining capacity with access to favourable Mid Continent refining economics. We view Holly as the best stock in our coverage universe to play the light-heavy and WTI-Brent crude differentials."
"Cash on hand looks to reach record levels in 2011 and 2012 - With the expected close of the FTO deal and the potential 4Q11/1Q12 sale of its UNEV pipeline project stake, we estimate HOC’s pro forma cash position will swell to $1.5B (~$14/share) in 2011 and $2.5B ($24/share) in 2012. This begs the question: how will management deploy this cash? We expect management to look internally at synergy oriented projects, but also to consider share buy-backs or a dividend increase. These would likely depend on the company’s profitability through 2H11."
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