Analysts at several of the banks who led the recent initial public offering of Delek Logistics on Tuesday launched formal coverage of the pipeline operator with upbeat ratings. Delek Logistics, which went public early this month at $21 per member interest, is underpriced and will benefit from its growth prospects, say the researchers at Bank of America Merrill Lynch, Barclays Capital and Goldman Sachs. Goldman has placed a $26 price tag on the interests, which had slipped back below their IPO price (Ticker: DKL) in the days before Thanksgiving. On Monday, they climbed almost 4 percent to $23.
Don't look for Delek US Holdings to prepare its Mapco Express retail chain for a spinout along the lines of its Delek Logistics division's initial public offering. President and CEO Uzi Yemin this week told analysts and investors on his team's Q3 conference call that he is very happy with the state of Mapco and sees Delek US continuing to build its new concept stores going forward.
[W]e are developing our new business model that when we see a great rate with our mega stores this stores performing very, very well. Our target is to continue build these stores. We are setting the past that there will be 10 to 15 stores and every year and we think that this target should continue for the next two, three years.
After underwriters upsized the Delek Logistics Partners initial public offering by exercising their right to sell an extra 1.2 million partner interests, the oil storage and pipeline spinout from Brentwood-based Delek US Holdings wrapped up a busy week raising a shade under $180 million. The partner interests of Delek Logistics (Ticker: DKL) are down almost 2 percent today as the broader market has given up more ground.
The newly listed partner interests of Delek Logistics had a solid first day Friday, climbing more than 6 percent from their $21 opening price. They were up more than 10 percent for most of the day, but some late profit-taking drove them down to $22.35. Click here for our other coverage of Delek Logistics' IPO.
Edward Westlake at Credit Suisse says oil refiners such as Delek US Holdings could be at the beginning of a big run now that investors appear to have latched on to logistics assets as the place to be in energy. Delek's IPO of its logistics assets is underway and Westlake says that "at current valuations, 40-50 percent of the value of [Phillips 66] and [Delek] would be supported by our logistics fair value alone. There is now 50 percent upside to theoretical value across the group." He has raised his price target 8 percent to about $34.50. Delek (Ticker: DK) closed Friday trading up more than 6 percent at $25.15.
In what's at least the third case of its kind, Los Angeles law firm Glancy Binkow & Goldberg has filed a putative class action against HCA Holdings related to the hospital titan's initial public offering earlier this year. Like the other cases filed, this suit says HCA misled investors about its accounting practices and revenue growth.