On Friday, TD Cowen adjusted its price target on shares of Darling Ingredients (NYSE:DAR), a company specializing in turning animal by-products into usable ingredients. The new price target is set at $43.00, a decrease from the previous $45.00, while the firm maintained a Hold rating on the stock.
The adjustment comes as TD Cowen incorporates revised renewable diesel (RD) margin assumptions based on their latest industry outlook into Darling Ingredients' financial projections. According to the firm, the forecasts for the fiscal years 2024-2025 remain mostly unchanged. However, there is a noted potential risk to Darling's Diamond Green Diesel (DGD) margins towards the year-end. This risk is attributed to a possible increase in U.S. biofuel imports, which could cap the near-term growth prospects for the company.
The analyst from TD Cowen also mentioned regulatory uncertainties that could influence Darling Ingredients' financial performance. A key decision pending is whether international feedstocks will be eligible for the 45Z tax credit, a factor that could have a significant impact on the company's earnings before interest, taxes, depreciation, and amortization (EBITDA). The outcome of this ruling has the potential to affect Darling's annual EBITDA by up to $0.4 billion.
InvestingPro Insights
Amidst the evolving market conditions for biofuels and regulatory uncertainties, Darling Ingredients (NYSE:DAR) presents a mixed financial outlook based on the latest data from InvestingPro. With a market capitalization of $5.44 billion and a P/E ratio of 14.85, the company is trading at a low earnings multiple, which might appeal to value investors. The P/E ratio adjusted for the last twelve months as of Q2 2024 stands at 16.3, reflecting the market's current valuation of the company's earnings capacity.
InvestingPro Tips suggest that analysts have revised their earnings expectations downwards for the upcoming period, which aligns with the concerns raised by TD Cowen. Additionally, the company's stock has experienced a decline over the last month, with a 15.65% decrease in price total return. Despite these challenges, Darling Ingredients' liquid assets exceed its short-term obligations, indicating a degree of financial stability in the near term. Furthermore, analysts predict the company will remain profitable this year, providing a cautiously optimistic view for potential investors.
For a more comprehensive analysis, including additional InvestingPro Tips on Darling Ingredients, interested readers can explore the insights available at https://www.investing.com/pro/DAR. This resource offers a deeper dive into the company's financial health and market performance, with further tips to guide investment decisions.
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