Par Pacific: Crack Spread Euphoria Creates 40% Downside
Par Pacific Holdings, Inc. has seen a significant increase of over 70% year-to-date, largely due to high crack spreads and strong refinery performance. However, analysts warn that these elevated crack spreads are unsustainable, indicating a potential downside risk of around 40%. The company's current valuation appears stretched, leading to a recommendation to sell until a normalization of crack spreads occurs.
- ▪Par Pacific is up over 70% YTD, driven by elevated crack spreads and strong refinery performance, particularly in Hawaii.
- ▪Current crack spreads are unsustainable, exposing significant downside risk as mean reversion is likely.
- ▪Valuation appears stretched with minimal upside, suggesting approximately 40% downside from current levels.
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