Wall Street investment bank Morgan Stanley recently published an upgraded earnings forecast for HF Sinclair Corporation (DINO.US) for the third quarter of 2025. The firm's core thesis centers on refining operations benefiting from strengthening crack spreads (approximately +5% Q/Q) combined with improved throughput following maintenance completion, leading to significant sequential performance improvements. Despite some headwinds from weaker capture rates, overall profitability is expected to exceed market consensus. Consequently, Morgan Stanley maintains its "Overweight" rating on HF Sinclair Corporation shares, with a price target remaining at $60 per share.

Morgan Stanley's equity research team's latest forecasting model for HF Sinclair Corporation's business outlook projects: Q3 2025 earnings per share (EPS) of $1.92 (compared to market consensus of $1.80), with company-level EBITDA of $722 million (versus consensus expectations of approximately $693 million, and above MS's previous forecast of around $675 million).

For individual business segments, Morgan Stanley provides optimistic projections across the board. In Refining operations, the firm anticipates benchmark crack spreads to improve by approximately 5% sequentially, with throughput recovering following planned maintenance completion. Total company throughput is estimated at 675 kbpd (closely aligned with consensus expectations of 677 kbpd). Morgan Stanley expects Mid-Con capture rates to weaken sequentially due to softer jet/diesel differentials and tighter WCS spreads, while West region differentials (WCS, ANS, Syncrude) are projected to remain relatively stable. Therefore, Morgan Stanley forecasts the company's refining segment EBITDA at approximately $531 million, above market consensus of $505 million and higher than Q2's approximately $476 million. The latest forecast model shows refining margins of approximately $16.68 per barrel (vs. market consensus of $16.06 per barrel), with expected capture rates of around 59% (compared to 67% in Q2).

For the Lubricants & Specialties business, Morgan Stanley anticipates volume recovery following planned Mississauga maintenance and significant market environment improvements. The firm projects Q3 EBITDA for this segment at approximately $79 million, close to consensus expectations of $81 million, and significantly higher than Q2's approximately $55 million.

Regarding the Renewables business, the firm expects benchmark profit metrics to decline sequentially (from approximately $0.01 per gallon to $0.06 per gallon range), with throughput around 600 kgpd, remaining roughly flat sequentially due to continued economic pressures. Therefore, this segment is expected to post an EBITDA loss of $11 million (market consensus: -$9 million; Q2: -$2 million).

For Midstream operations, Morgan Stanley indicates that final business results are expected to remain essentially flat sequentially, with Q3 EBITDA projected at approximately $113 million (consistent with the company's annualized run rate of about $450 million; market consensus approximately $115 million).

In Marketing operations, Morgan Stanley assumes seasonal volumes and margins remain healthy, projecting Q3 EBITDA at approximately $24 million (market consensus $26 million).

Regarding HF Sinclair Corporation's full-year and medium-term outlook, Morgan Stanley's latest expectations include: 2025 full-year adjusted EBITDA forecast of $1.975 billion (+2% from MS's previous expectation); 2026E approximately $2.116 billion and 2027E approximately $1.963 billion expectations remain largely unchanged. 2025 full-year operating EPS expectation of $3.82 (previous expectation approximately $3.62, +6%); 2026E approximately $4.52 and 2027E approximately $4.04 expectations remain essentially unchanged. 2025 full-year free cash flow expectation of $941 million (previous expectation $904 million, +4%). Morgan Stanley anticipates the company's net debt and capital structure will continue improving, with dividend yield ranges of approximately 3.8%–5.7% (varying by year).

HF Sinclair Corporation is an independent energy company centered on refining operations, spanning lubricants/specialty products, renewable fuels, marketing, and midstream activities. During a period when international crude oil benchmark prices—Brent crude—have remained persistently low due to oversupply expectations, the company's strong stock performance this year has been primarily driven by refining business "crack spreads/margins" recovering in Q2 and Q3, delivering above-consensus earnings, while diversified operations and share buybacks with dividends have enhanced shareholder returns.

HF Sinclair Corporation's current stock price hovers around $50.59, with year-to-date gains of up to 50%, significantly outperforming the S&P 500 index. HF Sinclair Corporation operates as an independent energy company/independent refiner in the U.S. market, providing conventional and renewable fuels, lubricants and specialty products, with involvement in marketing and midstream transportation businesses. The company's proprietary and branded network covers North America, with approximately 678,000 barrels per day refining capacity and lubricant production capabilities, while operating growing renewable fuel assets.

For major refiners like HF Sinclair Corporation, refineries profit from "crack spreads" rather than crude oil prices themselves. Refining profits are more closely correlated with "crack spreads"—the differential between refined product prices (gasoline/diesel, etc.) and crude oil costs. Wider crack spreads mean significantly improved margins for refineries like HF Sinclair Corporation, and profits can rise substantially even when crude oil prices weaken—this represents the core logic behind HF Sinclair Corporation's stock surge this year.

Starting in Q2 2025, global and U.S. refining margins/crack spreads have recovered (for instance, global composite refining margins reached new highs in May since March 2024; Q3 U.S. gasoline crack spreads doubled year-over-year, with refined product inventory drawdowns better than seasonal norms), providing major refinery stocks with both earnings and valuation improvements.