Caris & Co. analyst Ann Kohler has upgraded her recommendation for Alon USA Energy Inc. (NYSE:ALJ) to "Buy" from "Above average", and raised her target price to $34 from $25. Alon USA rose 2.3% to $18.24 on Friday, giving a market cap of $853 million. The recommendation reverses Caris's downgrade of the share from "Buy" to "Above average" made in mid-January.
The company is controlled by Alon Israel Oil Company Ltd..
Kohler noted that Alon USA's share has fallen below its IPO price. The sharp increase in crude oil prices over the past nine months has hurt the company's earnings and share price, even as the company doubled its refining capacity. She added that the company is considering enhancing the value of its Paramount subsidiary, possibly either through a joint venture or an IPO.
Kohler predicts that Alon USA will probably report annual earnings before interest, taxes, depreciation and amortization (EBITDA) of $540 million beginning in 2011, provided that the Paramount refinery completes its hydrocracker and naphtha hydrotreater by late 2010.
Alon USA has received mixed ratings of late. On Friday, Lehman Brothers cut its target price for the company while reiterating its "Equal weight" recommendation. Two weeks ago, Credit Suisse raised its recommendation for the company to "Neutral", and last month, BMO Capital Markets gave the company a "Market perform" recommendation, while cutting its target price.
Published by Globes [online], Israel business news - www.globes-online.com - on February 17, 2008
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