On Monday, Truist Securities revised its price target for REX American Resources (NASDAQ:) (NYSE:REX), a company engaged in ethanol production and renewable energy. The new price target is now $60.00, compared to the previous target of $65.00. Despite the adjustment, Truist Securities maintains a Buy rating on the stock.
The price target adjustment comes as Truist Securities updates its estimates to reflect revised crush spread forecasts and timelines for carbon capture, utilization, and storage (CCUS) projects. The company notes that while the industry is still awaiting new federal guidance on CO2 pipelines, REX American Resources has been proactively managing the 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 company’s guidance for this year. However, estimates for 2025 have been revised downward as the expected benefits of the CCUS project are now not expected to materialize until 2026.
The Company’s commentary follows a site visit conducted earlier this year to observe the diligent execution of REX’s project plans. Despite the revised price target, the Company’s stance on REX American Resources remains positive, as reflected in the reiterated Buy rating.
In other recent news, REX American Resources Corp. has made significant progress in modernizing its equity administration and advancing its carbon capture, utilization and storage (CCUS) initiatives. The company recently amended its charter to move to an accounting system for its shares, eliminating the need for physical share certificates. This move is consistent with current practices in the securities industry and simplifies the transfer and management of share ownership.
Financially, despite challenges in the ethanol market, REX reported solid first quarter results with a significant increase in ethanol sales and gross profit. 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 for REX and lowered the price target from $70 to $65, but maintains a buy rating for the shares. The company highlighted REX’s consistent operational and financial performance and its debt-free balance sheet. These are the latest developments at REX American Resources.
InvestingPro Insights
Recent data from InvestingPro provides additional context to investors considering REX American Resources’ financial position and market performance. The company has a market capitalization of approximately $830.73 million and a P/E ratio of 12.65, reflecting its relative value to earnings. Notably, REX has maintained profitability over the past twelve months, consistent with analysts’ predictions that the company will be profitable again this year. This is supported by base earnings per share of $3.76 for the same period.
From a liquidity perspective, REX has more cash than debt on its balance sheet, which, together with cash exceeding current liabilities, provides financial stability. This is an important factor for investors, especially given the current economic environment and the company’s ongoing projects. In addition, REX has delivered strong returns over the past five years, although analysts expect a decline in revenue for the current year. Revenue growth showed a decline of 10.48% over the past 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 that can help in making investment decisions, visit https://www.investing.com/pro/REX.
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