On Monday, Truist Securities revised its price target for REX American Resources (NASDAQ:AREC) (NYSE:REX), a company active in the ethanol production and renewable energy sector. The new price target is now set at $60.00, reduced from the previous target of $65.00. Despite the adjustment, Truist Securities maintains a Buy rating on the stock.
The adjustment in the price target comes as Truist Securities updates its estimates to reflect revised crush spread forecasts and timelines for Carbon Capture, Utilization, and Storage (CCUS) projects. The firm notes that while the industry is still awaiting new federal guidelines for CO2 pipelines, REX American Resources has been proactive in managing aspects of its expansion and CCUS project that are under its control.
Truist Securities acknowledges that REX is expected to benefit from improved crush spreads in the second half of 2024, leading to an increase in the firm's forecasts for that year. However, the estimates for 2025 have been revised downward as the anticipated benefits from the CCUS project are now expected to materialize in 2026.
The firm's commentary follows a site visit conducted earlier in the year, where the diligent execution of REX's project plans was observed. Despite the revised price target, the firm's stance on REX American Resources remains positive, as reflected in the reiterated Buy rating.
In other recent news, REX American Resources Corp has been making significant strides in modernizing its stock administration and advancing its carbon capture, utilization, and storage (CCUS) initiatives. The company recently amended its by-laws to transition to a book-entry system for its stock, eliminating the need for physical stock certificates. This move aligns with current practices in the securities industry and streamlines the transfer and management of stock ownership.
On the financial front, REX reported robust Q1 results with a significant increase in ethanol sales and gross profit, despite facing challenges in the ethanol market. The company has maintained its profitability and a solid financial position, with significant cash reserves and no bank debt.
Analyst firm Truist Securities has adjusted its outlook on REX, reducing the price target to $65 from $70, but maintaining a Buy rating on the shares. The firm highlighted REX's consistent operational and financial performance and its debt-free balance sheet. These are the recent developments for REX American Resources.
InvestingPro Insights
Recent data from InvestingPro provides additional context for investors considering REX American Resources' financial position and market performance. The company holds a market capitalization of approximately $830.73 million, with a P/E ratio of 12.65, reflecting its relative value against earnings. Notably, REX has maintained profitability over the last twelve months, which aligns with analysts' predictions that the company will continue to be profitable this year. This is supported by a basic EPS of $3.76 for the same period.
From a liquidity perspective, REX has more cash than debt on its balance sheet, which, along with liquid assets exceeding short-term obligations, provides financial stability. This is an important factor for investors, especially given the current economic environment and the company's ongoing projects. Additionally, REX has demonstrated a strong return over the last five years, although analysts anticipate a sales decline in the current year, with revenue growth showing a decrease of 10.48% over the last twelve months as of Q1 2023.
For those interested in further analysis and metrics, InvestingPro offers additional InvestingPro Tips for REX American Resources. To explore these insights, which may help inform investment decisions, visit https://www.investing.com/pro/REX.
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