Goldman Sachs reiterates Buy on DK and raises target price to $83

Overview

This report updates earnings forecasts for U.S. SMID-cap refiners DK, PARR, PBF, CLMT, and CVI following earnings season. Goldman Sachs remains broadly constructive on refining industry fundamentals and identifies DK as its relative preferred name.

Core views

Refining margins remain constructive, driven primarily by low global refined-product inventories, geopolitical supply disruptions, and resilient demand; the outlook for light-heavy crude differentials is also becoming more favorable. For DK, SRE outcomes, the Enterprise Optimization Plan, growth at Delek Logistics, and realization of sum-of-the-parts valuation are the core drivers of a value re-rating.

Analysis framework

The report updates its model using 2Q26 actual results, management guidance, refinery capture rates, throughput, operating expenses, and logistics forecasts; valuation is primarily based on a sum-of-the-parts approach and incorporates M&A scenario value.

Methodology notes

• Valuation methodsSum-of-the-Parts Valuation

  SOTP

  Eighty-five percent of DK's target price is based on sum-of-the-parts valuation, reflecting the standalone value of its refining and Delek Logistics businesses, among others.

• Valuation methodsM&A Scenario Valuation

  M&A value

  Fifteen percent of the target price incorporates M&A value; the model assumes a $1/bbl higher crack spread, consistent with the methodology used across its coverage universe.

• Cash Flow ValuationFree Cash Flow Yield

  2027 FCF yield

  Goldman Sachs expects DK to trade at an approximately 13% 2027 free cash flow yield and views this as a foundation for capital returns.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Delek US Holdings (DK)

  Core covered company and relative preferred name

  Strengths

  Improved refining operations, solid cash flow, SRE optionality, the Enterprise Optimization Plan, and growth at Delek Logistics with potential for value unlock through sum-of-the-parts valuation.

  Weaknesses

  The investment thesis is relatively sensitive to refining margins, policy outcomes, and operational execution.

  Comparison

  Among the SMID-cap refiners covered in the report, Goldman Sachs explicitly prefers DK; PARR is also rated Buy, while PBF and CLMT are Neutral and CVI is Sell.

  Risks

  Downside in refining margins, weaker-than-expected operational execution, capital allocation missteps, and SRE progress or value below expectations.

• Par Pacific Holdings (PARR)

  Peer comparison company

  Strengths

  Hawaii maintenance is progressing as planned, its three mainland refineries have SRE optionality, and cash flow and deleveraging are improving.

  Weaknesses

  It faces uncertainty around China's refined-product export policy, volatility in delivered crude prices in Hawaii, and weaker near-term repurchases.

  Comparison

  Rated Buy with a $90 target price; alongside DK, it is among Goldman Sachs' preferred names.

  Risks

  Refining margins, retail earnings, and operational execution risks.

• PBF Energy Inc. (PBF)

  Peer comparison company

  Strengths

  Benefits from high refining margins, declining net debt, and lower capital expenditure guidance.

  Weaknesses

  Current relative valuation and portfolio operational execution limit upside potential.

  Comparison

  Neutral rating with an $81 target price.

  Risks

  Refining margins, operational execution, and capital return risks.

• Calumet Inc. (CLMT)

  Peer comparison company

  Strengths

  The base-oil margin and RIN price environment is favorable, while MRL's SAF capacity ramp provides medium-term growth potential.

  Weaknesses

  Operational execution at the MaxSAF project requires further confirmation, and valuation is elevated following recent relative outperformance.

  Comparison

  Neutral rating with a $45 target price.

  Risks

  Earnings risks in renewable diesel, specialty products, and the Performance Brands business.

• CVR Energy Inc. (CVI)

  Peer comparison company

  Strengths

  Tight refining and fertilizer markets could keep conditions above mid-cycle levels, with room for deleveraging.

  Weaknesses

  Relative valuation keeps Goldman Sachs cautious, while the strategic direction following the CEO change remains to be seen.

  Comparison

  Sell rating with a $36 target price.

  Risks

  Refining margins, operational execution, and capital return risks.

Key data

• DK RatingBuyGoldman Sachs reiterates its positive view.
• DK Target Price$83/share6-month target price, raised from $73.
• Expected Total ReturnApproximately 28%Based on the current level cited in the report.
• 2027 Free Cash Flow YieldApproximately 13%Based on Goldman Sachs forecasts.
• DK 2026-2028 EBITDA Forecasts$1,677mn / $1,208mn / $1,037mnPreviously $1,422mn / $1,163mn / $969mn.
• Potential 2025 SRE Value15% to 30% of market capitalizationDependent on assumed prices of $1.50 to $2.50/RIN.

Impact & implications

If refining margins remain strong, the SRE decision generates cash flow, and operational optimization progresses, DK's cash-generation capacity and room for repurchases could improve, narrowing its sum-of-the-parts valuation discount. Conversely, weaker-than-expected SRE outcomes, deteriorating refining spreads, or execution shortfalls would weaken the investment thesis.

Risks

• Refining margins or crack spreads are below expectations.
• Refined-product market rebalancing occurs faster than expected as global supply disruptions ease.
• DK refinery operations, cost controls, or execution of the Enterprise Optimization Plan fall short of expectations.
• The 2025 SRE decision is delayed, exemption volumes are insufficient, or RIN monetization value declines.
• Share repurchases, deleveraging, and Delek Logistics capital allocation do not meet investor expectations.
• Progress in unlocking sum-of-the-parts value is slow.

What to watch

• The 2025 SRE decision and RIN prices, monetization strategy, and potential uses of cash.
• Global refining inventories, geopolitical supply disruptions, crack spreads, and light-heavy crude differentials.
• Quantifiable progress in DK's refining operational improvements and Enterprise Optimization Plan.
• Growth investments, cash generation, distribution growth, and changes in DK's ownership stake in Delek Logistics.
• Specific progress in unlocking sum-of-the-parts value.
• The company's capital allocation priorities, including repurchases, debt management, and potential M&A.