CHICAGO (AP) -- Shares of Solazyme Inc. plummeted Thursday after an analyst downgraded the biofuels company to "Market Perform" from "Outperform" because of the recent run-up in the stock's price.
THE SPARK: Raymond James analyst Pavel Molkhanov explained the downgrade by noting that the stock had surpassed his $14-per-share target price and that the market is risk-averse at the moment.
THE BIG PICTURE: Analysts remain bullish on the company but the stock is likely to continue to be prone to sharp up-and-down swings. According to Molkhanov, the versatility of Solazyme's algae-produced oils opens the door to wide-ranging opportunities across the fuel, chemical, personal care, and nutrition markets. But there are risks as the company gears up various projects, and the stock's valuation is hard to gauge.
THE ANALYSIS: "Over the past six months, Solazyme shares have been highly volatile amid the turbulent broader market, but all in, they have gained 19 percent year-to-date, making them ... one of the best-performing clean tech stocks overall," Molkhanov told clients in a note. "We believe the risk/reward profile has become less attractive."
SHARE ACTION: Down $1.46, or 10.3 percent, to $12.72 in morning trading.
The stock had been on a tear lately as it began recovering from a slump that saw it shed two-thirds of its value last summer and fall. Even after gaining nearly 50 percent since late May, however, its price before Thursday's sell-off was only half the 52-week high of $27.47 from last July.