Israeli holding company Delek Group on Thursday sold 1.5 million shares of Delek US Holdings, the Brentwood-based owner of Mapco Express and big refineries in Texas and Arkansas. The sale is the latest in a series of big transactions that has dropped Delek Group's stake in the local company from more than 50 percent to right about 30 percent. Delek Group booked a big gain on the sale but Delek US shares (Ticker: DK) have been retreating of late and are now up just 5 percent in 2013.
Analyst Paul Cheng at Barclays Capital late last week lowered his price target for shares of Delek US Holdings to $48 from $52. Cheng's move, which came after Brentwood-based Delek reported its Q2 numbers, essentially undoes the second of two upgrades in the span of a week back in March.
Shares of Delek US Holdings and other Mid-Continent oil refiners have struggled in recent months as the gap between West Texas Intermediate and Brent crude oil has closed, eating into their margins. But over the past two days, two market watchers have said things will get better. Over at Tudor Pickering, Brad Olsen told Bloomberg that the WTI price will give up some ground given the 27 percent year-over-year jump in the amount of oil being stored in Cushing, Okla. And in initiating coverage of Delek with a 'neutral' rating, analysts at Goldman Sachs says the Brent-WTI spread should begin to widen again in the fourth quarter. They have set a $37 price target for shares of Delek (Ticker: DK), which have slid from about $40 to $28 since late March but are still up some 10 percent year to date.
Oh boy, what to do with all this cash?
The board of Delek US Holdings has again voted to pay out a special dividend. Investors of record on July 9 will get 10 cents per share late that month. It's the second time this year — seventh time since mid-2011 — that Brentwood-based Delek has unloaded some of its extra cash. Shares of the company (Ticker: DK) lost more than 4 percent Thursday but were up slightly in after-hours action.
SEE ALSO: March's announcement of the first special dividend
Delek Group out of Israel late last week sold 2 million of its Delek US Holdings shares to an unnamed investor for $32.18 apiece. The move comes less than three months after the former Delek US majority owner unloaded another 9 million shares of the Brentwood-based oil refiner and marketer. Since then, Delek US (Ticker: DK) has retreated almost 20 percent from its all-time highs. By our calculation, Delek Group still owns about 34 percent of its U.S. affiliate.
Avondale Partners analyst Kevin Campbell has raised his price target on shares of Corrections Corp. of America after the prison manager reported first-quarter results that topped consensus estimates. Campbell, who also lifted his 2013 and 2014 estimates for adjusted funds from operations by about 5 percent, now sees CCA (Ticker: CXW) climbing to $44 from its current level of about $38.
Over at Credit Suisse, Edward Westlake and his team have raised their earnings estimates for Delek US Holdings after company executives detailed investment plans for their Texas and Arkansas refineries that should bring a quick and sizable payoff. Even though they gave up 3 percent on Monday, Delek shares (Ticker: DK) are still up 35 percent this year.
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