Gevo, Inc. (GEVO) added one more partnership to its kitty as it signed a mega fuel sales agreement with American Airlines, Inc. (AAL) for the annual delivery of 100 million gallons of sustainable aviation fuel (SAF) worth $2.75 billion, including the value of environmental benefits.
Gevo shares reacted positively and jumped almost 10% on the news during the trading session, but closed almost 10% lower on July 22 to close at $2.45. However, at the time of writing, the stock was trading almost 3% higher today.
Gevo, Inc. is a next-generation biofuels company and the leading producer of energy-dense liquid hydrocarbons and renewable chemicals with net-zero greenhouse gas emissions.
The five-year agreement with American Airlines for Gevo’s planned future commercial operations is slated to begin in 2026 and marks the largest fuel sales agreement ever signed by Gevo.
With the new agreement, Gevo has successfully augmented the list of its partnerships to fulfill its goal to produce and commercialize 1 billion gallons of SAF by 2030.
Earlier in 2022, 14 airline companies agreed to buy 200 million gallons of SAF per year from Gevo’s future commercial operations.
GEVO CEO’s Comments
Gevo CEO, Patrick R. Gruber, said, “While there is a tremendous amount of work to complete to bring all the critical elements of net-zero carbon SAF to the marketplace, our memoranda of understanding with oneworld alliance members and this subsequent commitment from American Airlines demonstrates the important momentum that is building for these types of products.”
Wall Street’s Bullish Take on GEVO
Consensus among analysts is a Strong Buy based on 3 unanimous Buys. The average Gevo analyst price target of $15 implies a whopping 512.24% potential upside from current levels.
Positive News Sentiment about Gevo
News sentiment for GEVO is Positive, based on eight articles over the past seven days, with 100% of the articles carrying Bullish sentiment, compared to a sector average of 59%.
Gevo shares have lost almost 60% of their market capitalization over the past year.
In June, the company raised additional capital of approximately $150 million in a public offering of 33.33 million shares that was not taken well by the shareholders due to the dilution of their holdings.
Ahead of its expected Q2 earnings on August 8, the current share-price weakness could offer a great entry point to investors if they believe in the potential upside the company offers once its commercial operations commence in the future.