On Monday, TD Cowen announced a revision of its price target on Neste Oyj (NESTE:FH) (OTC: NTOIY) shares, lowering it to EUR29.00 from the previous EUR33.00 while maintaining a Hold rating on the stock.
The firm's decision comes in the wake of Neste's first quarter renewable products (RP) margin falling short by $60 per ton compared to the market consensus. The second quarter is also showing similar trends, suggesting a significant increase will be necessary in the second half of 2024 to meet the consensus forecasts. This expected improvement is dependent on the pricing of sustainable aviation fuel (SAF).
The analyst from TD Cowen noted that investors might remain cautious about the stock's prospects until tangible benefits from SAF are reflected in the company's financial results.
In light of the recent performance and market trends, TD Cowen has adjusted its forecast for Neste's FY24 RP margin, reducing it by $30 per ton to a figure that is $45 below the consensus. Additionally, the firm has decreased its volume expectations by 400 thousand tons per annum (ktpa), setting it at 300ktpa below the consensus.
The revised price target of EUR29.00 translates to approximately $16.00, indicating a downward adjustment in the valuation of Neste's shares. The Hold rating suggests that TD Cowen advises investors to maintain their current position in the stock without further buying or selling until more definitive signs of performance improvement are evident.
Neste Oyj specializes in producing renewable diesel and other renewable products, with SAF being an important focus area for the company as the aviation industry seeks more sustainable fuel options. The financial metrics and future projections provided by TD Cowen reflect the firm's analysis of Neste's current market position and expected performance.
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