H.C. Wainwright analyst Amit Dayal maintained a Buy rating on Vertex Energy (VTNR – Research Report) today and set a price target of $3.50.
Amit Dayal has given his Buy rating due to a combination of factors surrounding Vertex Energy’s strategic business decisions and financial projections. The pivot away from renewable diesel (RD) production in response to low Low Carbon Fuel Standard (LCFS) and D4 renewable identification number (RIN) prices reflects a significant strategic shift for the company. Dayal views this decision as a practical move, considering the negative contribution margin from the incremental production of RD. He notes that Vertex Energy is well-prepared to resume RD production if market conditions become favorable again, evidenced by their successful filings for various low carbon intensity feedstocks.
Dayal’s recommendation also factors in the company’s financial outlook and cost management. Vertex Energy’s focus on conventional fuels is expected to provide more stable margins and cash flows, which is crucial in the context of fluctuating crack spreads. Moreover, the company’s efforts to preserve cash and reduce operating costs, along with a decrease in capital expenditures, are seen as positive steps toward financial sustainability. Dayal projects revenues of approximately $2.8 billion for 2024 and 2025, with rising adjusted EBITDA, which underpins the valuation that supports his Buy rating. Despite the risks inherent in market conditions and the energy sector, the analyst’s assessment of Vertex Energy’s strategic adjustments and financial forecast drives the optimistic rating.
Dayal covers the Industrials sector, focusing on stocks such as Plug Power, Ceco Environmental, and Fuel Tech. According to TipRanks, Dayal has an average return of -15.6% and a 25.56% success rate on recommended stocks.
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Vertex Energy (VTNR) Company Description:
Vertex Energy, Inc. engages in the recycle of industrial waste streams and off-specification commercial chemical products. It focuses on recycling used motor oil and other petroleum by-product streams. The company operates through the following business divisions: Black Oil, Refining & Marketing and Recovery. The Black Oil division engaged in operations across the entire used motor oil recycling value chain, including collection, aggregation, transportation, storage, refinement, and sales of aggregated feedstock and re-refined products to end users. The Refining & Marketing division engaged in the aggregation of feedstock, re-refining it into value end products, and selling these products to customers, as well as related transportation and storage activities. The Recovery division engages in the recovery and management of hydrocarbon streams. This division also provides industrial dismantling, demolition, decommissioning, investment recovery and marine salvage services in industrial facilities. The company was founded by Benjamin P. Cowart on May 14, 2008 and is headquartered in Houston, TX.
