UPDATE: Bank of America Downgrades Northern Tier Energy on Near-Term Risks

In a report published Tuesday, Bank of America Merrill Lynch analyst Jason Smith downgraded Northern Tier Energy (NYSE: NTI) from Buy to Neutral, and lowered the price objective from $30 to $27.

In the report, Bank of America noted, “NTI has had a very strong run since its IPO just over one year ago, with the units up 70% - when including distributions of $4.66/unit, this implies a total return of 103%. But as a pure play on the Mid-Continent, where both Bakken and Heavy Canadian spreads have narrowed significantly relative to coastal grades, this presents a material headwind for distribution expectations. Coupled with a smaller turnaround in the Fall, the start up of the coker at the BP Whiting refinery, and higher than expected capex over the back half of the year, we view the near-term risks post 2Q earnings as somewhat difficult to ignore, therefore, we downgrade to Neutral, PO to $27.”

Northern Tier Energy closed on Monday at $23.75.