JPMorgan Upgrades Delek US (DK) to Neutral

JPMorgan analyst John Royall upgraded Delek US (NYSE: DK) from Underweight to Neutral with a price target of $26.00 (from $23.00).

The analyst comments: "We upgrade DK to Neutral from Underweight as we believe, at the most basic level, DK has generated consolidated EBITDA of ~$45mm on a value-neutral basis by reinvesting high multiple proceeds into lower multiple acquisitions/organic projects. We do still view the "unlock," from a perspective of the market ascribing a higher multiple to the consolidated operation, as potential upside and a "wait and see" that we do not model at this time, but we raise our price target by $3/sh based on the value creation from the "free" EBITDA (~9.5x asset sale reinvested at ~4-5x on a consolidated level). The efforts announced thus far do, however, further management's goal of increasing third party exposure at the DKL level. De-consolidation of DKL is likely the next major piece of the puzzle, which management has been vocal about. We think this is likely to occur in a combination of selling down DK's stake in DKL, and/or growing DKL via another acquisition utilizing third party equity."

For an analyst ratings summary and ratings history on Delek US click here. For more ratings news on Delek US click here.

Shares of Delek US closed at $18.75 yesterday.

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