UPDATE: Piper Jaffray Upgrades Green Plains Renewable Energy On Ethanol Margin Outlook

In a report published Wednesday, Piper Jaffray analyst Michael Cox upgraded Green Plains Renewable Energy (NASDAQ: GPRE) from a Neutral rating to an Overweight rating and raised the price target from $17.00 to $20.00.

In the report, Piper Jaffray says "We believe the ~10% sell-off in GPRE shares following the EPA's ethanol mandate cut on Friday presents an attractive entry point in GPRE shares; we are lifting our price target to $20 and upgrading the stock to Overweight. Investors over-estimate the impact of the mandate on ethanol demand, in our view, and with corn prices trading lower and the wide price gap between ethanol and conventional gasoline remaining, we see the ethanol margin outlook staying stable or potentially improving over the next 3-6 months – which contrasts to the market's perception of a cut to the RFS mandate. A stable margin outlook provides the basis for our above-consensus estimates for FY14. GPRE ethanol volumes are also poised to increase with the planned acquisition of the former Biofuel Energy ethanol plants, which provides a lift to earnings over the next year. We project the cash position is bolstered by healthy margins."

Green Plains Renewable Energy closed on Tuesday at $14.15.