Calumet Specialty Products Partners (CLMT) PT Raised to $33 at H.C. Wainwright

H.C. Wainwright analyst Amit Dayal raised the price target on Calumet Specialty Products Partners (NASDAQ: CLMT) to $33.00 (from $25.00) while maintaining a Buy rating.

The analyst commented: "We are increasing our price target on Calumet to $33 from $25, driven by the expected positive impact on the company's financials from the closing of the $1.44B Department of Energy (DoE) loan that was announced after the market closed on Friday, January 10. We have previously highlighted this as an important catalyst for the stock that had not yet been fully priced in by the street despite conditional commitment received by the company in mid-October 2024. The loan is expected to fund the expansion of the company's renewable fuels positioning the company to establish production capacity of around 300M gallons of Sustainable Aviation Fuel (SAF) and 30M gallons of Renewable Diesel (RD). The company is expecting to receive $782M during January 2025, as the first tranche of funds that would partly fund expenses already incurred by Montana Renewables Limited (MRL) in the capacity build=out. The remaining funds will be held in a delayed draw construction facility through 2028, to be drawn as the MaxSAF build-out is completed in steps. Simultaneous to the first tranche release, the company is making a $150M equity investment from its balance sheet into MRL. Investors should note that this is a 15-year note with an annual interest rate at the U.S. Treasury Rate plus 3/8%, and servicing of principal and interest is deferred until MaxSAF is commissioned. Some of the key drivers supporting our higher price target include: (1) materially strengthened balance sheet; (2) cash flow benefits from roughly $80M in annual debt service costs; (3) potential margin improvements in 2025 and beyond from supply constrained environment for renewable fuels; (4) continued lower production cost advantage relative to other players; and (5) optionality for spinoff of the renewables business from the specialty business. Reiterate Buy rating."

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