HFC Rises Despite Bear Note, Workforce Cuts

Goldman Sachs lowered its target price

Assistant Editor
Jul 2, 2020 at 10:32 AM
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The shares of HollyFrontier Corp (NYSE:HFC) are up 3.6% at $28.70 this morning despite reports that the independent petroleum refiner had to cut its workforce by roughly 130 employees at its Cheyenne, Wyoming location in recent weeks. Meanwhile, Goldman Sachs cut its price target by $2 to $26, citing concerns over global refining capacity overshadowing demand in the next several years. 

Most analysts are already approaching HollyFrontier stock with caution. Of the 12 in coverage, six brokerages rate it a tepid "hold," while one says "strong sell." Still, the remaining five all chimed in with "buy" or better rating. Meanwhile, the 12-month consensus target price of $37.29 is 34.6% premium to current levels, which could signal some additional price target slashes in the near future. 

The charts haven't been too kind to HFC in recent history, though the stock did manage to distance itself from its nine-year mid-March low of $18.48. HollyFrontier stock peaked at a quarterly high of $38.61 though it was rejected by its descending 140-day moving average, sending the security to 45.4% year-to-date deficit. Now, pressure at the 10-day moving average is keeping a lid on the shares. 

Meanwhile, the options pits have been brimming with bears. This is per the stock's 10-day put/call volume ratio of 1.55 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than all but 5% of readings from the past year. 

Lastly, HFC's Schaeffer's Volatility Index (SVI) of 58% stands higher than just 20% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations right now.  

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