UPDATE: Cowen Downgrades KiOR on Slower Columbus Plant Production
In a report published Tuesday, Cowen and Company analyst James Medvedeff downgraded KiOR Inc. (NASDAQ: KIOR) to Market Perform from Outperform, dropping its price target to $1.50 from $8.50.
According to the report, the downgrade follows production at the Columbus plant continues to ramp slower than expected. Q413 throughput was about 50-60 percent of nameplate, resulting in low yields. Volume is low and a weaker EPA mandate likely reduce ASPs. More funding is needed for planned 2014 R&D and capital expenditures.
“We substantially cut 2013-15 estimates and have withdrawn our prior model for 2016 and beyond,” the report noted. “The EPA's proposed RVOs (renewable volume obligations) for 2014 have depressed the value of cellulosic RINs, and we assume no relief in the final rule. Until Columbus achieves steady-state production and higher volume, we also assume customers will continue to receive discounts, resulting in a modest (60-65c) effective premium over the hydrocarbon value of fuels produced.”
Some downsides from the report include declining oil prices further pressure ASP and strategic buyer needed to fund expansion.
KIOR closed Monday at $1.40 with shares trading down at 6.04 percent.
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