On Thursday, Citi adjusted its financial outlook for Neste Oyj, a Finnish oil refining and marketing company. The firm's price target for Neste's shares was lowered to €24.00 from the previous €27.00, while the buy rating for the stock was maintained.
The adjustment follows Neste's announcement of a reduction in its full-year Renewable Products (RP) guidance, which includes both margin and sales volumes. This change is attributed to a weaker performance in the third quarter and the upcoming transition to a new CEO in the following month.
Citi noted that the revised guidance from Neste is likely to prompt significant downward revisions in the consensus estimates. Consequently, Citi has reduced its own forecast for Neste's full-year 2024 earnings per share (EPS) by 60%. Despite the immediate challenges, Citi anticipates a potential tightening in the biofuels market by 2025. This market shift could present a favorable opportunity for Neste if the company can demonstrate improved operational performance in the upcoming quarters.
The analyst from Citi highlighted the importance of the next few quarters for Neste, as the company's ability to showcase enhanced operational delivery is crucial. With renewable fuel mandates expected to increase next year, Neste's positioning in the market could strengthen, thereby enabling the company to capitalize on the anticipated uptick in demand for renewable fuels.
Neste's recent performance has been influenced by the current macroeconomic conditions, which have impacted its Renewable Products segment. As the company prepares for a change in leadership, the market will be watching closely to see how the new CEO will navigate these challenges and steer the company towards growth.
The Finnish company, listed on the Helsinki Stock Exchange as NESTE:FH and over-the-counter in the United States as OTC:NTOIY, specializes in refining and marketing petroleum products with a focus on advanced, cleaner energy solutions. Neste's strategic direction in the coming months will be significant as it adjusts to the evolving energy landscape and regulatory environment.
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