Noble Capital Markets has reiterated an 'Outperform' rating for Gevo Inc (NASDAQ:GEVO), noting that the company’s second-quarter results met its expectations.
Gevo recently reported revenue of $100,000, in line with Noble’s projections, the firm said. But there is more to it than that, according to senior research analyst Michael Heim.
“The real story, however, is not near-term results but plant developments, financing, and contract signings,” Heim said in a note to clients. “Gevo was active in all aspects of the business. The company signed five new take-or-pay jet fuel contracts and now totals 350 million gallons/year or $2.2 billion.”
READ: Gevo ends 2Q with $546.8M and spotlights a slew of recent sales agreements
He continued: “This is more contracted outtake than the projected NZ1 plant production. Management's vision is to use NZ1 to demonstrate economics but has a clear eye on replicating the project. In fact, it plans to continue to sign contracts for production beyond 2027.”
On the subject of NZ1, Gevo recently purchased land for the plant and has said it is on schedule for a 2025 start-up, Heim noted.
“While much of the focus is on the NZ1 plant, investors should also keep an eye on Gevo's dairy RNG project expected to start operations in the third quarter,” Heim added. “Management also discussed working with existing ethanol producers to improve operations. Finally, it hinted that extracting butane, isobutane and other fuels from plant life could be used to develop plastics. In summary, the company is seeking to reduce the carbon creation of any hydrocarbon production.”
Noble’s rating for the company remains 'Outperform', but the firm adjusted down its price target to $10, in part due to a $150 million private placement that resulted in a higher share count.
Gevo shares traded 5% higher Tuesday morning at $3.39.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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