Gevo stock holds Buy rating, $14 target from H.C. Wainwright

Investing.com

Published May 30, 2025 07:34AM ET

Gevo stock holds Buy rating, $14 target from H.C. Wainwright

On Friday, H.C. Wainwright maintained a Buy rating on Gevo , Inc. (NASDAQ:GEVO) with a price target of $14.00. The stock, currently trading at $1.31 with a market capitalization of $304 million, is showing signs of undervaluation according to InvestingPro Fair Value metrics. The endorsement follows Gevo's announcement on May 28 that it has agreed to sell its wholly owned subsidiary, Agri-Energy, LLC, to A.E. Innovation, LLC for $7 million. The deal includes Agri-Energy's ethanol production facility in Luverne, MN, which has an annual capacity of 18 million gallons.

The transaction is slated for completion by the end of 2025, contingent on A.E. Innovation securing the necessary financing and meeting other standard closing conditions. Gevo is expected to receive $2 million in cash at closing and an additional $5 million in future payments. This strategic sale is projected to save Gevo approximately $3 million each year by eliminating costs associated with keeping the facility idle. The cost-saving initiative comes at a crucial time, as InvestingPro data shows the company's EBITDA at -$54.57 million, though its healthy current ratio of 2.04 indicates sufficient liquidity to meet short-term obligations.

In addition to the financial benefits, Gevo will retain ownership of part of the vacant land at the site for potential future development. The company will also keep certain assets related to isobutanol production, which has the capacity to produce up to 1 million gallons per year. This isobutanol can be marketed as a specialty chemical or further processed into isooctane and jet fuel.

The analyst at H.C. Wainwright highlighted the sale as a positive step for Gevo, noting the cost savings and retained assets for future opportunities. The firm's reiterated Buy rating and price target reflect the potential for Gevo's stock in light of this recent development. The company's stock has shown strong momentum with an 18% return over the past week, and analysts forecast revenue growth of 9.5% for the current year. For deeper insights into Gevo's financial health and growth prospects, including 12 additional ProTips and comprehensive valuation metrics, visit InvestingPro .

In other recent news, Gevo, Inc. reported its Q1 2025 financial results, showing a revenue of $30.9 million, slightly missing the forecasted $31.91 million. The company continues to focus on monetizing 45Z tax credits and expanding its alcohol-to-jet (ATJ) plant capacity, with expectations to improve financial performance throughout the year. In a strategic move, Gevo entered into an agreement to sell its subsidiary Agri-Energy, LLC for $7 million to A.E. Innovation, LLC, which plans to restart ethanol production at the facility in Luverne, Minnesota. This transaction is projected to save Gevo approximately $3 million annually in current facility idling costs.

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Gevo also announced the appointment of Oluwagbemileke (Leke) Agiri as the new Chief Financial Officer, succeeding L. Lynn Smull. Agiri's appointment is part of the company's long-term succession planning and commitment to growth. The leadership change aims to strengthen Gevo's financial strategy as the company focuses on renewable energy solutions. Additionally, Gevo's strategic focus on low-carbon solutions and tax credit monetization continues to drive investor interest despite the revenue miss.

Analyst discussions during the earnings call highlighted the 45Z tax credit extension and Gevo's carbon credit monetization strategy. The company remains cautiously optimistic about future growth prospects, driven by its commitment to sustainable energy solutions and strategic partnerships. These developments reflect Gevo's ongoing efforts to enhance its market position and financial standing in the renewable energy sector.

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