BMO cuts Green Plains shares target on weak ethanol margins
BMO Capital Markets revises Green Plains Renewable Energy (NASDAQ: GPRE) outlook, lowering price target from $25.00 to $22.00 due to reported first-quarter EBITDA loss of $22 million, attributed to weaker ethanol margins. Limited 2024 guidance hints at potential positive margins by year-end amid GPRE 2.0 initiatives. Concerns linger over consensus EBITDA for 2024 and 2025. Despite challenges, BMO notes possible future recovery, cautiously optimistic about earnings post-2026. Green Plains’ market cap stands at $1.32 billion, trading near 52-week low at $20.17. Revenue declines by 17.62% in Q1 2024 to $3.06 billion. Weak gross profit margins at 5.63% persist, though liquid assets exceed short-term obligations, signaling financial stability. Analysts foresee profitability in 2024, offering hope for investors. For detailed insights, InvestingPro tips are available.
On Monday, BMO Capital Markets adjusted its outlook on Green Plains (NASDAQ: GPRE) Renewable Energy (NASDAQ: GPRE) shares, reducing the price target from $25.00 to $22.00 while retaining a Market Perform rating.
The revision follows Green Plains’ reported first-quarter EBITDA loss of $22 million, which was a significant deviation from the expected consensus profit of $8 million. This loss was attributed primarily to weaker ethanol margins.
The company has provided limited guidance for the year 2024 but indicated a potential return to positive ethanol margins by the year’s end, alongside progress on its GPRE 2.0 initiatives.
In light of these factors, BMO Capital has revised its estimates downward and set a new price target. The firm has expressed continued concern regarding the consensus EBITDA for the years 2024 and 2025, citing risks associated with the timing and scale of earnings growth through 2025.
Despite the downward revision, BMO Capital acknowledged that the first quarter might represent the lowest point for EBITDA, suggesting a possible recovery in the future.
The firm also noted a cautiously optimistic view of Green Plains’ earnings potential beyond 2026. The analyst’s statement pointed out the challenges ahead while recognizing the long-term prospects of the company’s earnings growth.
InvestingPro Insights
As Green Plains Renewable Energy (NASDAQ:GPRE) navigates through a challenging period with a reported EBITDA loss and revised analyst expectations, it’s essential to consider the company’s financial health and market position. According to InvestingPro data, Green Plains currently has a market capitalization of $1.32 billion and is trading near its 52-week low, with a price of $20.17 at the previous close. The company’s revenue for the last twelve months as of Q1 2024 stood at $3.06 billion, although it experienced a revenue decline of 17.62% during the same period.
InvestingPro Tips indicate that Green Plains suffers from weak gross profit margins, which are reflected in a margin of 5.63% for the last twelve months as of Q1 2024. Despite these challenges, the company’s liquid assets exceed its short-term obligations, providing some financial stability. Analysts also predict that Green Plains will be profitable this year, offering a glimmer of hope for investors. For those seeking deeper analysis, there are additional InvestingPro Tips available, which can be accessed for comprehensive guidance on the company’s outlook.
Source Link : https://in.investing.com/news/bmo-cuts-green-plains-shares-target-on-weak-ethanol-margins-93CH-4170536
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