Here’s a response from K Quon re: stock/revenue price estimates.
chunkymunky
Comments (3)
Hi Kevin,
Interesting article. Is it fair to say if Solazyme revenue hits above $100 Million within 2 years, the stock should worth more than $20? Do you think that is something that is realistic and can be achieved? Do you also think they will be selling Bio-Fuel(renewal energy) & grow revenues? That’s assuming price of crude oil keeps going up. I’m looking forward to that.
Long Investor on SZYM
21 Jun, 10:39 PMReply! Report AbuseLike0
Kevin Quon , Contributor
Comments (1093)
Author’s reply » Chunkymunky,
Presuming the financial consolidation of sb oils by the end of this year, I would imagine $100 million would be a gross understatement of what is to come after 2 years. Nameplate capacity is expected within 1.5 years and 100k mt would probably account for at least 180 mil on an annual basis if it were solely dedicated to fuel blendstocks alone. Recall though that algavia is expected to sell for 8k/mt and it’s likel that clinton or moema will have been retrofitted within by that timeframe.
As for the price target, it is higly dependent on market perception, share count, and the willingness to value solazyme for its growth. I fully believe if wall street were to more accurately assess the growth potential of the company in its de risked state now that Solazyme would easily warrant a $2 bil mkt cap and achieve in excess of a $20 PT even now.
But institutions have not yet come to understand this co and the market has been turned off as a whole by the sector. If these things normalize, the price will uptick accordingly. Until then we should continue a modest uptick at best (as now being witnessed by the ascending base support over the last year.)
Biofuel will be sold but more likely in the form of blendstocks for some time. This is just to further develop the market without selling for much of a loss (if any, over time). Crude oil prices will affect all of our markets actually so don’t think biofuels will be the only gainer out of that. Even food is affected by oil markets and vegetable oils are as well without a doubt. That said I believe anything around 100/barrel of crude is more than generous for our markets.
Just a few thoughts to consider.
Best,
Kevin