Analyst Andrew Strelzik of BMO Capital reiterated a Buy rating on Darling Ingredients (DAR – Research Report), with a price target of $57.00.
Andrew Strelzik has given his Buy rating due to a combination of factors, including the company’s recent EBITDA performance and its potential future growth catalysts. Despite the company’s decision to remove its 2024 EBITDA guidance, which indicates a degree of uncertainty and could temporarily affect the stock’s performance, Strelzik is optimistic. He believes that the company’s EBITDA will likely exceed $1.5 billion in 2024. Moreover, he anticipates a stronger earnings outlook for Darling Ingredients, factoring in the company’s productivity opportunities and the prospect of improved margins in its Diamond Green Diesel (DGD) segment.
Additionally, Strelzik expects Darling Ingredients to benefit from its vertically integrated business model and several key growth drivers, including Sustainable Aviation Fuel (SAF) contributions, regulatory incentives such as Low Carbon Fuel Standard (LCFS) policy changes, and lower input costs for DGD. Although there are near-term challenges, such as lower rendering values and Renewable Identification Numbers (RIN) pressures, these are reflected in the current stock price, offering a favorable risk/reward scenario. Strelzik also points toward the food segment’s potential for double-digit EBITDA growth, adding to the company’s overall stability and growth prospects.
In another report released today, Scotiabank also assigned a Buy rating to the stock with a $73.00 price target.
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Darling Ingredients (DAR) Company Description:
Darling Ingredients, Inc. engages in the development and production of natural ingredients from edible and inedible bio-nutrients. It operates through the following segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The Feed Ingredients segment includes ingredients business such as fats and proteins used cooking oil, trap grease and food residuals collection, the Rothsay ingredients, and the ingredients and specialty products. The Food Ingredients segment comprises gelatin, natural casings and meat by-products, and specialty products activities. The Fuel Ingredients segment consists of biofuel and bioenergy services. The company was founded in 1882 and is headquartered in Irving, TX.
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