UPDATE: Goldman Sachs Downgrades CVR Energy (CVI) to Sell Due to Premium Valuation

Goldman Sachs analyst Neil Mehta downgraded CVR Energy (NYSE: CVI) from Neutral to Sell with a price target of $12.00 (from $18.00).

The analyst comments "First, we are concerned that declining US oil production will keep the 2H2020/2021 Brent-WTI spread compressed versus recent history, with CVI most exposed. Second, we see risk to CVI’s dividend given 2020 FCF burn, publicly stated interest in pursuing growth projects/M&A and the company’s history of reducing distributions in prior times of stress, and now model a dividend cut. Third, we find valuation is stretched on a variety of metrics including P/E, dividend discount model and EV/complexity barrel. Fourth, RINs represent a long-term risk/uncertainty, which could create upward pressure in 2021 given uncertainty around the small refining exemption program. We note we forecast CVI EPS of ($0.30) versus consensus of $0.94 in 2020 and we are 31%/19% below FactSet consensus in 2021/2022, reflecting narrow Brent-WTI spreads and weak refining margins."

For an analyst ratings summary and ratings history on CVR Energy click here. For more ratings news on CVR Energy click here.

Shares of CVR Energy closed at $15.50 yesterday.

You May Also Be Interested In

• Fiserv (FISV) PT Lowered to $60 at Freedom Broker
• Indigo Paints (INDIGOPN:IN) PT Raised to INR1,300 at ICICI Securities
• Freedom Broker Upgrades Serve Robotics (SERV) to Buy