Last October, Gevo (GEVO) formed a strategic alliance with Axens, with a target of accelerating the commercialization of sustainable ethanol-to-jet (ETJ) projects.
The collaboration is the reason why the renewable fuel start-up is switching to using ethanol fermentation technology rather than isobutanol fermentation technology for the production of sustainable aviation fuel (SAF) and other renewable hydrocarbon products at Net-Zero 1, the company’s proposed biorefinery.
Gevo’s Net Zero concept’s aim is to produce liquid hydrocarbons utilizing renewable sources of energy such as wind, renewable natural gas and biogas so that these emit net zero greenhouse gas emissions when used in engines.
Given the company can leverage previous ethanol related engineering work and add 15MGPY of renewable hydrocarbon capacity while being guaranteed by Axens that the ethanol to SAF conversion process takes place, management is of the belief the move reduces the risk profile of the project on several fronts.
There are other advantages too, says H.C. Wainwright analyst Amit Dayal. “We believe this move also opens up another monetization opportunity with a more direct path to offer this plant design to other ethanol plant operators, who may be seeking an entry into the SAF market,” the 5-star analyst explained.
Management also noted that by early 2023 all the financial agreements for Net-Zero 1 should be concluded – potentially with the addition of a debt offering. While this is beyond Dayal’s previous forecast for a mid-2022 close, the project’s completion is not expected to have any delays, as the company’s balance sheet should be able to fund all the needed investments and keep capex in line. By late 2024, the company anticipates the project will be “mechanically complete” and fully operational the following year.
All in all, Dayal maintained a Buy rating and sticks to an $18 price target, suggesting room for upside of a huge 407% over the next year. (To watch Dayal’s track record, click here)
Two other analysts have recently reviewed Gevo’s prospects and, like Dayal, they take the bullish route; the extra positive reviews provide the stock with a Strong Buy consensus rating. Adding to the good news, the $13 average price target calls for one-year gains of a plentiful 311%. (See Gevo stock forecast on TipRanks)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
