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On Friday, Truist Securities initiated coverage on Delek Logistics Partners, LP (NYSE:) shares, assigning a Buy rating with a price target of $46.00. The firm’s analyst highlighted the potential for material upside in the company’s units, citing the stable high-margin affiliate business and growing third-party activity with improving margins as key drivers.

Delek Logistics Partners is expected to generate significant incremental free cash flow (FCF) following a strategic business combination. Projections suggest a free cash flow yield of approximately 8% and a distribution yield of around 12% by 2025. The price target is anchored on an enterprise value to projected 2025 EBITDA multiple of about 9.0x, which positions the company favorably within its peer group.

The analyst also pointed to the possibility of a total forecasted return of roughly 45%. This optimistic outlook is further bolstered by the expectation of an upcoming indices rebalance, which could lead to additional unit price appreciation for Delek Logistics Partners.

The assessment by Truist Securities reflects confidence in the company’s financial outlook and growth trajectory. The firm underscores the attractive valuation and yield metrics that Delek Logistics Partners exhibits relative to its peers, suggesting a strong investment case for the stock.

InvestingPro Insights

As Delek Logistics Partners (NYSE:DKL) garners attention with a new Buy rating from Truist Securities, current metrics and insights from InvestingPro further enrich the investment thesis. With a solid market capitalization of $1.79 billion and a PE ratio holding steady at 13.01, Delek Logistics shows stability in valuation. The company’s commitment to rewarding shareholders is evident through its impressive dividend yield of 11.11%, which is supported by a consistent track record of dividend growth, most recently at 6.57%.

InvestingPro Tips highlight the company’s resilience, with Delek Logistics having raised its dividend for 11 consecutive years. Additionally, the stock’s current positioning in oversold territory according to the RSI, coupled with its trading near a 52-week low, may signal a potential entry point for investors seeking value. It’s worth noting that analysts predict profitability for the company this year, and it has been profitable over the last twelve months.

For investors seeking comprehensive analysis and additional insights, there are more InvestingPro Tips available for Delek Logistics, which can be accessed through InvestingPro’s platform. By using the coupon code PRONEWS24, investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription to stay ahead with real-time data and expert analysis.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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