Scotiabank moved HF Sinclair (NYSE:DINO) to a Sector Perform rating from Sector Outperform and trimmed its target price to $53 from $62, the bank said on Wednesday. The Canadian lender's analyst, Paul Y. Cheng, attributed the change to uncertainty around the company’s leadership situation and an internal Audit Committee review of disclosure processes.
Cheng said the downgrade reflects questions that emerged after management did not provide clear answers during a call, a lack of clarity he believes has weighed on investor confidence in the shares.
HF Sinclair is a U.S.-based operator of petroleum refineries and a marketer of petroleum products. Scotiabank’s revised $53 price objective is $9 lower than its prior forecast.
Financial results released by HF Sinclair show a mixed picture. The company posted a fourth-quarter net loss of $28 million, or $0.16 per diluted share. On an adjusted basis, HF Sinclair reported earnings of $221 million, or $1.20 per diluted share, which exceeded adjusted expectations. Management cited stronger refining margins as a key driver of the adjusted outperformance.
The company also benefited from small refinery RINs waivers, a development that increased adjusted refinery gross margins by $313 million, according to its reporting.
In a strategic move related to its retail footprint, HF Sinclair announced the creation of Green Trail Fuels, LLC, a joint venture with UPOP Holdings. The new entity will operate 30 retail sites across Colorado and New Mexico, aiming to expand HF Sinclair’s branded marketing presence in the Rockies and the Southwest.
On the leadership front, CEO Tim Go has taken a voluntary leave of absence, and Board Chair Franklin Myers has assumed the role of interim CEO. The company said the Board’s Nominating, Governance, and Social Responsibility Committee will evaluate and determine next steps regarding permanent leadership arrangements.
The combination of an active Audit Committee review and the CEO’s leave of absence formed the basis for Scotiabank’s reassessment of HF Sinclair’s near-term outlook. The analyst highlighted that unresolved governance and disclosure questions can affect market perceptions and, by extension, the stock’s valuation.
Investors and market participants will likely watch for further details from HF Sinclair on the Audit Committee’s work and any decisions the Board makes about leadership, alongside subsequent operational and financial updates that could clarify the company’s trajectory.