Analyst downgrades Aventine, Vera Sun and Pacific Ethanol, forecasts lower ethanol prices in 2008

September 21, 2007

FBR analyst Eitan Bernstein downgraded Aventine (AVR), VeraSun (VES) and Pacific Ethanol (PEIX) as Big Ethanol braced for another fall in stock prices as the analyst proved pessimistic on the chances for a price recovery for ethanol or relief for producers on the cost side. Price targets were reduced more than 50% on all three stocks. Bernstein slashed his price forecast for Aventine from $24 to $9, VeraSun from $24 to $12, and Pacific Ethanol from $15 to $8. The two largest ethanol producers in the country are the privately-held POET and Archer-Daniels-Midland (ADM). Third quarter profit forecasts were slashed for all three by 11 to 18 cents per share, and only VeraSun is expected to show a third-quarter profit.

The spot price of ethanol was reduced in his forecast from $2.20 to $2.05.

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Written by Jim Lane · Filed Under Producer News, Research