CVR Energy Tanks 9% On Quarterly Loss; Street Says Hold

CVR Energy posted a worse-than-expected loss in the fourth quarter, as the petroleum refining company grappled with lower demand for refined products due to the pandemic and a faulty renewable fuel standard program. Shares fell 8.8% in Monday’s extended trading session after closing 7% higher on the day.

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CVR Energy (CVI) incurred an adjusted loss of $1.18 per share in 4Q, compared with the $0.72 loss per share estimated by analysts. Net sales generated in the quarter amounted to $1.12 billion, falling short of analysts’ expectations of $1.19 billion.

The company’s petroleum segment recorded net sales of $1 billion in the quarter, down 33.3% year-over-year. EBITDA was $1 million, down from $142 million in the prior-year period.

CVR Energy said that capital from process improvement projects has been moved to Wynnewood renewable diesel unit project to offset renewable fuel standard impacts and a decline in carbon footprint. (See CVR Energy stock analysis on TipRanks)

CVR Energy CEO Dave Lamp said, “CVR Energy’s 2020 fourth quarter and full-year results were negatively impacted by demand destruction caused by the global COVID-19 pandemic.”

“However, despite continued difficult market conditions driven by narrow crack spreads, tight crude oil differentials and high Renewable Identification Number (RIN) pricing, we exceeded our $50 million target of reducing operating and SG&A expenses year-over-year,” he added.

Following the 4Q results, Citigroup analyst Prashant Rao upgraded the stock to Buy from Hold and almost doubled the price target to $31 (26.5% upside potential) from $16. In a note to investors, the analyst said, “The broader market is missing the valuation uplift” which “CVR’s move into renewable diesel presents.”

“The first phase of its Wynnewood project, targeted for a mid-year start-up, is like a low-cost option play to capitalize on a favorable biomass market,” Rao added.

Meanwhile, the Street’s consensus rating on the stock is a Hold. That’s based on 3 Holds, 2 Buys and 1 Sell. Looking ahead, the average analyst price target stands at $24, putting the downside potential at 2% over the next 12 months. Shares have increased more than 45% over the past six months.

TipRanks’ Hedge Fund Trading Activity tool shows that confidence in CVR Energy is currently Neutral as 5 hedge funds increased their cumulative holdings of the stock by 97,700 shares in the last quarter.