On Wednesday, H.C. Wainwright maintained a positive outlook on shares of Gevo , Inc. (NASDAQ:GEVO), reiterating a Buy rating with a $14.00 price target. The firm highlighted Gevo's significant advancements in the past year and a half that have strengthened the company's position and enhanced its profitability and cash flow prospects.
Gevo's strategic moves include the acquisition of Red Trail's ethanol plant in September 2024, which boasts a production capacity of 65 million gallons per year and is situated on 500 acres in North Dakota.
This facility, with its carbon sequestration capabilities, has recently reported a gross profit of $5.3 million, equating to 15.3% of its revenues, and a net profit of $3.8 million, representing 11.0% of revenues. The existing infrastructure at this plant is capable of sequestering approximately 160,000 metric tons of carbon annually.
In addition to the acquisition, Gevo has expanded its renewable natural gas (RNG) capacity over recent quarters. The company's production of 101,101 MMBtu of RNG has surpassed its annual target rate of 400,000 MMBtu as of the third quarter of 2024.
Furthermore, Gevo has initiated the commercialization of its Verity tracking system with the launch of a privately sponsored grower program for a biofuel client. This system is designed to monitor and verify the carbon intensity of various products and services, which could become a significant contributor to Gevo's future profitability.
Lastly, the company is making progress with its Ethanol-to-Olefins (ETO) technology, which is expected to generate licensing revenues in the upcoming months. This development is part of Gevo's broader strategy to diversify its offerings and revenue streams. The firm's reiterated Buy rating and price target reflect confidence in Gevo's trajectory and potential for sustained growth.
In other recent news, Gevo Inc. has reported substantial growth prospects with key strategic developments. These include the imminent acquisition of Red Trail Energy, anticipated to close by Q1 2025 and expected to generate an estimated $200 million in revenue for fiscal 2023. Moreover, Gevo received a sizeable conditional loan of $1.63 billion from the U.S. Department of Energy (DOE) for its Net-Zero 1 Sustainable Aviation Fuel (SAF) project.
The company also recently acquired CultivateAI, integrating agricultural data analytics with Gevo's carbon accounting solutions, a move that is expected to contribute $1.7 million to the revenue in 2024. These initiatives align with Gevo's focus on scaling low-carbon solutions and achieving a positive adjusted EBITDA by 2025.
Despite reporting a loss from operations of $24 million for Q3 2024, Gevo maintains a robust financial standing with $292.9 million in cash and a combined revenue and interest income of $5.8 million. The company also ensured that drought conditions would not impact their supply chain of field corn and is exploring alternative logistics for CO2 transportation. These are recent developments in Gevo's strategy to bolster its revenue and enhance its SAF project.
InvestingPro Insights
To complement the positive outlook presented by H.C. Wainwright, recent data from InvestingPro offers additional context on Gevo's financial position and market performance. As of the last twelve months ending Q3 2024, Gevo reported revenue of $15.59 million, with a notable year-over-year growth of 16.59%. This aligns with the company's strategic expansions and acquisitions mentioned in the article.
However, it's important to note that Gevo is currently operating at a loss, with an adjusted operating income of -$92.52 million for the same period. This is reflected in two key InvestingPro Tips: "Quickly burning through cash" and "Not profitable over the last twelve months." These points underscore the importance of the company's recent strategic moves, including the acquisition of the Red Trail ethanol plant and the expansion of RNG capacity, which aim to improve profitability.
On a positive note, another InvestingPro Tip highlights that Gevo "Holds more cash than debt on its balance sheet," which could provide financial flexibility as the company pursues its growth initiatives. Moreover, the stock has shown strong performance recently, with a 147.25% price return over the last three months and a 126.61% return over the last six months, potentially reflecting market optimism about the company's prospects.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips on Gevo, providing a deeper understanding of the company's financial health and market position.
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