On Friday, Piper Sandler adjusted its outlook on Darling Ingredients (NYSE:NYSE:DAR) shares, reducing the price target to $48.00 from the previous $50.00 while sustaining an Overweight rating on the stock. The revision in the price target is a response to the updated third-quarter earnings per share (EPS) and EBITDA (earnings before interest, taxes, depreciation, and amortization) estimates for Darling Ingredients, which have been lowered due to weaker than expected margins and slower improvements in pricing.
The firm's analysts have revised the third-quarter EPS/EBITDA estimates for Darling Ingredients to $0.20 per share and $260 million, respectively, a decrease from the prior estimates of $0.62 per share and $323 million. This downward adjustment is primarily attributed to weaker margins at Darling Ingredients' joint venture, Diamond Green Diesel (DGD), and a slower improvement in fat pricing than initially anticipated.
Furthermore, Piper Sandler has also revised its fiscal year 2024 and 2025 EBITDA estimates for Darling Ingredients to $1,113 million and $1,397 million, respectively. These figures are down from the previous estimates of $1,227 million and $1,721 million.
The firm anticipates that Darling Ingredients' management will provide updated FY24 guidance and outline the outlook for 2025. However, it is expected that the guidance range will be wide due to uncertainties surrounding the pace and scope of improvement tailwinds.
In addition to the revisions for Darling Ingredients, the estimates for OPAL Fuels LLC (OPAL) have also been adjusted. The firm has lowered its third-quarter EPS/EBITDA projections for OPAL to $0.09 per share and $26 million, respectively, from the earlier estimates of $0.14 per share and $27 million. The decrease is primarily driven by a slower ramp in upstream renewable natural gas (RNG) gas monetization than previously expected.
In other recent news, OPAL Fuels Inc. has reported significant business developments. The company has sold approximately $11.1 million in investment tax credits to a subsidiary of Apollo Global Management (NYSE:APO), Inc. This sale is a result of the Inflation Reduction Act, marking OPAL Fuels' entrance into IRA tax credit sales. This transaction provides the company with additional liquidity to further its strategic growth initiatives.
In addition, OPAL Fuels has reported solid Q2 performance, with results aligning with expectations. Despite revising its full-year Renewable Natural Gas (RNG) production outlook slightly downward due to recent facility ramp-up times, the company maintains its adjusted EBITDA guidance for 2024. OPAL Fuels also emphasized its strong liquidity position, reinforcing its capacity to meet its funding needs through internal cash flows.
Finally, the company has commenced construction on its 16th RNG project and aims to have at least 2 million MMBtu of new RNG production in construction for 2024. These are recent developments that demonstrate the company's commitment to growth in the renewable energy sector.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on OPAL Fuels LLC's financial position and market performance. The company's market capitalization stands at $644.63 million, reflecting its current market valuation. Despite the lowered earnings estimates mentioned in the article, OPAL has demonstrated strong revenue growth, with a 27.13% increase over the last twelve months as of Q2 2024, reaching $294.01 million.
InvestingPro Tips highlight that OPAL operates with a moderate level of debt and has been profitable over the last twelve months. These factors may provide some stability as the company navigates the challenges of slower upstream RNG gas monetization mentioned in the analyst report. Additionally, analysts predict that the company will remain profitable this year, which aligns with the positive, albeit reduced, EPS estimates provided by Piper Sandler.
It's worth noting that OPAL's stock price has fallen significantly over the last year, with a one-year price total return of -51.62% as of the latest data. This decline may present an opportunity for investors who believe in the company's long-term potential in the renewable energy sector.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for OPAL Fuels LLC, providing a deeper understanding of the company's financial health and market position.
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