Delek Holdings: 3Q26 Model Update

The Iran conflict and the associated Strait of Hormuz disruption removed a meaningful share of global refining and petrochemical capacity from the market, tightening crude and refined product balances and driving refining margins sharply higher. U.S.-based refiners have been positioned to run at high utilization and capture the elevated crack environment, translating into materially higher earnings, and are largely insulated from Middle Eastern crude supply. DK, as a Mid-Con refiner, is particularly well placed: its inland system is supplied with domestic crude by pipeline and sells product largely into regional inland markets, which shields it from the sharp rise in tanker freight rates that has raised costs for coastal refiners. After updating our model for recent strip cracks, we maintain our Neutral rating and establish a Dec-27 price target of $71, up from our prior $70. Our target is based on a SOTP valuation: we value the refining business at ~3x EV/2026E EBITDA, value DK's DKL