Biofuels Stock and Financial Outlook for September 20: Big Ethanol poised for another plunge

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. The general market was up modestly in futures trading, presaging a good open that may help biodiesel stocks.

The Biofuels Digest Indexâ„¢ (BDI), a basket of 21 major public biofuel stocks, fell 1.49% to 98.67 as enthusiasm over the Fed rate cut waned and investors picked up on their steady flight from Big Ethanol stocks.

Among biofuel stocks, losers led gainers by 5 to 2, but Big Ethanol faced strong declines as Aventine (AVR) dropped 1.11%, VeraSun (VSE) dropped 4.49%, Pacific Ethanol (PEIX) dropped 8.42% and Archer-Daniels-Midland (ADM) fell 1.15%.

Microcaps recorded a mixture of losses and gains, with Environmental Power (EPG) up 6.33% on news that it has agreed with the Benham Companies to construct a major biogas project in Nebraska Facility. Green Energy Resources was up 14.71% to $0.195, while Texcom (TEXC.PK) lost 21.21% of its value to fall to $0.13.

A New York Times editorial on the “discouraging” economics of corn ethanol contributed to the sector’s gloom.

In the broader markets, the Dow Jones industrials lost 48.86 points to 13,766.70, the S&P 500 fell 10.28 to close at 1518.75, and the Nasdaq fell 12.19 points to 2654.29

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Written by Jim Lane · Filed Under Biofuels Digest Index (BDI), Stock & Financial Outlook