Sitfel Oct. downgrade & $8.50-$10 target - due to tax credit non-renewal and RFS
Both the tax credit non-renewal and RFS questions are still present. Since then, we've seen negative comments from the analyst (Jeffrey Osborne) on the SYNM and LS9 acquisitions and the cash burn they will require in 2014. He reiterated the Sell after the last earnings call. Exciting stuff ...
** Renewable Energy (REGI -14.7%) is downgraded to Sell from Hold at Stifel Nicolaus based on increasing risks to two key pillars that support REGI's growth and margins.
EPA's 2014 renewable fuel mandates are likely to disappoint and lead to biodiesel production shrinking from current run-rate levels, and 2013-end expiration of the $1/gal blenders tax credit exceeds REGI's current EBITDA/gal and likely will lead to margin compression, the firm says.
With very limited visibility to 2015 and beyond, Stifel sees fair value for REGI shares in $8.50-$10 range.
The "sell" is a buying opportunity for institutions that see the long term potential of the company. The tax credit issue that has bipartisan support is priced in. I have seen this before, a respected analyst drops a "sell rating" on the market and the stock goes sideways to up. REGI is a baby bull that will likely always trend ahead and be "over-priced" in many people's views. Of course I have also a stock tank when a respected analyst drops a "sell" on the market but that isn't happening here.