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Truist cuts Green Plains stock target, but keeps Buy rating

Published 08/05/2024, 11:18 PM
GPRE
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Truist Securities has adjusted its outlook on Green Plains (NASDAQ:GPRE) Renewable Energy (NASDAQ: GPRE), reducing the price target from the previous $30.00 to $25.00. Despite the lowered price target, the firm maintains a Buy rating on the company's stock.

Green Plains experienced a challenging first half of 2024, marked by a weak ethanol crush and delays in protein and sugar projects, as well as policy uncertainties. The second quarter is expected to show some improvement over the first quarter, though the real boost to EBITDA is anticipated in the second half of the year.

Notably, the third quarter to date has seen a 42% increase in crush spreads compared to average second-quarter levels.

The latter half of 2024 is expected to be more favorable for Green Plains, with contributions from the Tharaldson protein and the first returns from Clean Sugar projects. Additionally, updates on the Trailblazer CO2 pipeline could further impact the company's performance.

Despite the tempered short-term expectations, Truist Securities remains optimistic about Green Plains' prospects moving forward into the second half of the year.

Meanwhile, BofA Securities also reduced its price target for Green Plains shares, following a quarter that fell short of expectations. Despite this, the firm remains optimistic about Green Plains' prospects, citing the expectation of rising ethanol margins and robust export demand as supporting factors. Green Plains' initiatives in carbon sequestration are also expected to become a significant source of revenue by late 2025.

InvestingPro Insights

Recent metrics from InvestingPro provide a detailed financial perspective on Green Plains Renewable Energy (NASDAQ:GPRE). With a market capitalization of $1.05 billion, the company's financial health is a mixed bag. While Green Plains is facing challenges with a negative P/E ratio of -13.36, indicating that the company has not been profitable over the last twelve months, it's important to note their liquid assets do exceed short-term obligations, which could provide some financial stability. Additionally, the company's gross profit margin stands at 5.63%, reflecting the weak gross profit margins highlighted by InvestingPro Tips. Despite these challenges, Green Plains has seen a strong return over the last month, with an 18.35% price total return, which aligns with Truist Securities' optimistic outlook for the latter half of 2024.

InvestingPro Tips further reveal that analysts do not anticipate Green Plains will be profitable this year, which may temper investor expectations. Moreover, the company is trading at a high EBITDA valuation multiple and does not pay a dividend, which could influence investment decisions. For readers interested in a deeper dive into the company's financials, InvestingPro offers additional tips on their platform.

These insights could be particularly valuable for investors considering Truist Securities' recent price target adjustment and the company's expected improvements in the second half of the year. Green Plains' financial health and performance metrics are crucial for understanding the potential risks and rewards associated with their stock.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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