Tuesday, Jefferies adjusted their outlook on shares of Green Plains (NASDAQ:GPRE) Renewable Energy (NASDAQ:GPRE), reducing the price target to $28 from the previous $37. The investment firm maintained a Buy rating on the stock despite the revision. The change follows Green Plains' second-quarter earnings report, which showed a loss of $0.38 per share, falling short of the consensus by $0.19 and Jefferies' own forecast by $0.44.
The shortfall in earnings has prompted Jefferies to revise their estimates, adopting a more conservative stance on the company's financial outlook. However, the firm remains optimistic about the future, anticipating that ethanol margins have reached their lowest point and are poised for a recovery in the second half of 2024. This expected rebound is attributed to favorable crop yields in North America and advantageous natural gas prices.
The report from Jefferies also noted that while the Clean Sugar project has experienced a slower ramp-up than initially anticipated, Green Plains' progress in expanding its low-carbon ethanol production, ingredients, and alternative proteins is still on track. This suggests that the company's diversification efforts in renewable energy sources are progressing despite some delays.
The investment firm's commentary underscores their belief in the potential for improvement in the company's financial performance. They highlight that the expected increase in corn crop yields and favorable natural gas prices should support a stronger second half for the year for Green Plains Renewable Energy.
In summary, Jefferies has lowered the price target for Green Plains Renewable Energy while continuing to endorse the stock with a Buy rating. The firm's revised estimates reflect a cautious approach due to recent earnings misses, yet they forecast a positive outlook for the company's ethanol margins and ongoing projects in the near future.
In other recent news, Green Plains Inc. reported lower-than-expected second quarter EBITDA of $5 million, falling short of the consensus estimate of $14 million, primarily due to lower ethanol margins. Despite this, the company provided a positive forecast for the third quarter of 2024, securing ethanol margin hedges at approximately $0.30 per gallon.
However, BMO Capital and Oppenheimer have adjusted their outlooks for the company, with BMO Capital reducing the stock's price target and Oppenheimer downgrading the stock from Outperform to Perform.
Green Plains' consolidated revenues decreased to $618.8 million, and the company recorded a net loss of $24.35 million for the quarter. Despite these challenges, the company achieved a record in renewable corn oil yields and is focusing on resolving construction quality issues at its Shenandoah facility.
The company's carbon capture project in Nebraska is progressing as planned, with an anticipated start date in the second half of 2025. Furthermore, the company is progressing in its transformation into a low-carbon bio-refinery platform, with ongoing equipment refreshes and plant expansions to boost capacity. These are the recent developments in Green Plains Inc.'s operations and strategy.
InvestingPro Insights
As Jefferies adjusts their outlook on Green Plains Renewable Energy (NASDAQ:GPRE), it's worth noting the real-time data and insights from InvestingPro that may provide context for investors. The market cap of Green Plains stands at $884.48 million, with a negative P/E ratio reflecting recent challenges, suggesting that the company is not currently profitable. Despite this, the company's liquid assets are sufficient to cover short-term obligations, which could be a sign of financial stability in the immediate future.
InvestingPro Tips highlight that analysts are not expecting Green Plains to be profitable this year, and a sales decline is anticipated in the current year. The company is also trading near its 52-week low, which could represent a potential buying opportunity for investors who believe in the company's long-term strategy and the expected recovery of ethanol margins as suggested by Jefferies.
For those seeking a deeper analysis, InvestingPro offers additional tips on Green Plains Renewable Energy, which can be found at https://www.investing.com/pro/GPRE. These insights could be particularly valuable in informing investment decisions, especially in light of the company's current valuation and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.