On Wednesday, UBS reaffirmed its positive stance on Neste Oyj, listed on the Helsinki stock exchange as NESTE:FH and over-the-counter as NTOIY, maintaining a Buy rating with a price target set at EUR41.00. The endorsement follows Neste's Analyst Day event, which included a tour of the company's Rotterdam facility, specializing in renewable diesel and Sustainable Aviation Fuel (SAF).
The CEO of Neste, Matti Lehmus, along with the management team, presented a reaffirmation of the company's targets and emphasized its competitive edge. Neste's early entry into the SAF market, its flexible operations, and the capability to process difficult feedstocks were highlighted as significant advantages. Additionally, the management provided an updated supply and demand forecast, projecting a more optimistic scenario beyond 2024.
While the company's communication on the future margins for Renewable Products and the potential uplift from SAF was not expansive, it remains a central topic of discussion among investors. UBS believes that for Neste's stock to recover from its previous underperformance, it is crucial for the company to demonstrate a positive trajectory in earnings and resolve operational challenges.
The financial institution anticipates that Neste will begin to show this positive earnings momentum throughout the remainder of 2024, particularly as the production and sales of SAF increase.
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