TD Cowen sees 20% downside in Delek US, downgrades to Sell

TD Cowen downgraded Delek US to Sell from Hold with a price target of $20, down from $25, which implies 20% downside from current levels. Delek’s parent may generate limited free cash flow at mid-cycle cracks, which is apparent from its recent results and guidance, the analyst tells investors in a research note. The firm says Delek has widened its strategic reorganization opportunity set to options “less core to the goal,” which may suggest issues executing on the better options. The company could benefit from an improved capital structure, though it has not pursued one to date, adds TD. The firm’s base case does not incorporate any strategic reorganization given an uncertain timeline.