Fuel producer Vertex Energy has risen in price
The stock of Vertex Energy Inc. (VTNR) rose almost 6% to $5.21 after the recommendation of Wall Street analysts. According to experts, the company has great potential in the oil refining market. Vertex Energy is engaged in the processing and sale of petroleum products, and the company is also one of the largest processors of used engine oil in the United States.
On Wednesday, December 1, Credit Suisse analysts raised the forecast for the shares to “above market” and raised the target price to $13, which implies an increase of more than 160% from the current price.
Credit Suisse sees the growth potential of Vertex Energy due to the ongoing transformation. Currently, the manufacturer is trying to sell its main engine oil processing assets to Safety-Kleen and focus on producing renewable diesel fuel by acquiring the Royal Dutch Shell refinery in Alabama by early 2022. According to analysts at Credit Suisse, entering the renewable energy market represents a significant “revenue growth potential.”
Overall, the company’s renewable diesel business could generate an EBITDA of $195 million once the Alabama refinery reaches its target production capacity of 14,000 barrels per day by mid-2023. In November, Vertex Energy has already raised $133.9 million to implement new projects.
However, so far, this amount is not enough to finance the acquisition of a new refinery, and the company intends to raise another $250 million in loans to fund the purchase and subsequent capital expenditures fully.
Meanwhile, the plan to sell the existing assets of Safety-Kleen has not yet eliminated severe regulatory obstacles. Thus, Vertex Energy has growth potential, but the company still needs to solve several organizational and financial problems. Once the barriers to growth, the producer’s growth prospects will become more confident.
