Vertex Energy (VTNR) PT Raised to $25 at H.C. Wainwright; Suggesting Another 500%+ Upside
H.C. Wainwright analyst Amit Dayal raised the price target on Vertex Energy (NASDAQ: VTNR) to $25.00 (from $4.00) while maintaining a Buy rating after the transformational deal in which it agreed to acquire refining and logistics assets of Shell in Mobile, Alabama, for $75M. The new price target suggests another 526% upside from yesterday's close.
The analyst commented, "The deal is expected to close by 4Q21. Though the company is acquiring a conventional energy-products asset, management intends to unlock value though an additional $85M investment in leveraging the asset's unique hydrocracking capability to produce renewable diesel. Management expects renewable diesel contribution at around 10,000 barrels per day to begin within around nine months post the closing of the transaction, with ramp to 14,000 barrels per day by March 2023. Management is guiding for $3B in revenues and $400M in gross profits from the Mobile refinery for 2023. Taking into account this outlook we are now revising our revenue and adjusted EBITDA expectations for Vertex in 2023 from $246.0M and $25.5M to $2.9B and $319.7M, respectively, positioning the company for a potential 10x-plus improvement in adjusted EBITDA in around 24 months. We are projecting 2022 revenues, adjusted EBITDA, and earnings of $2.2B, $158.6M, and $1.37 per share, respectively, compared to $281.5M, $12.2M, and a loss of $0.09 per share, in 2021. This translates to revenue and adjusted EBITDA growth rates of 692% and 1200%, respectively, in 2022. Similarly, our 2023 revenues, adjusted EBITDA, and earnings of $2.9B, $319.7M, and $3.12 per share, respectively, represent YoY growth of 28.5%, 101.5%, and 127.7%, respectively. At our $25 price target the company would continue to trade at very reasonable 2023 EV/adjusted EBITDA and P/E multiples of 4.0x and 8.0x, with a PEG ratio of 0.20x, which is well below 1.00x."