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On Tuesday, Raymond (NSE:RYMD) James analyst Pavel Molchanov adjusted the price target for Clean Energy Fuels (NASDAQ:CLNE) to $4.00, a decrease from the previous $5.00, while continuing to endorse the stock with a Strong Buy rating. The revision comes despite Clean Energy Fuels’ notable fourth quarter performance, which surpassed expectations with an adjusted EPS of $0.02, beating the Raymond James and consensus estimates of $0.01 and $0.00, respectively. Adjusted EBITDA for the quarter also outperformed, reaching approximately $23.6 million against an anticipated $19.3 million. According to InvestingPro data, the stock currently trades at $2.71, with analysts maintaining a strong consensus recommendation of 1.44 (where 1 is Strong Buy). Two analysts have recently revised their earnings estimates upward for the upcoming period.
Molchanov’s commentary highlighted the role of natural gas, including biogas-derived varieties, in the decarbonization of fleets. He pointed out that Clean Energy Fuels is expanding its business model beyond its traditional role as a fuel distributor by starting in-house production of renewable natural gas (RNG). This strategic move is part of the company’s growth story, which must be weighed against its high sensitivity to federal and state policy incentives. These policies are currently presenting headwinds to the company’s 2025 guidance. InvestingPro analysis shows the company maintains a healthy financial position with a current ratio of 3.06, indicating strong liquidity to support its expansion plans.
The quarter’s performance report detailed Clean Energy Fuels’ volume distribution, which included approximately 62.0 million gallons of RNG, around 16.5 million gallons of compressed natural gas (CNG), and about 64.4 million gallons in operations and maintenance service volume. These figures underscore the company’s strong finish to 2024.
Despite the near-term policy uncertainties that could impact the business, Molchanov reiterated his strong conviction in the stock’s potential. The analyst’s maintained Strong Buy rating reflects a belief in the company’s long-term prospects amidst the industry’s transition towards more sustainable fuel sources. The price target adjustment to $4.00 represents a recalibration of expectations in the context of current market conditions and policy challenges facing Clean Energy Fuels. Based on InvestingPro Fair Value analysis, the stock appears undervalued at current levels, with analysts projecting profitability for the company this year. For deeper insights into Clean Energy Fuels’ valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Clean Energy Fuels Corp has reported its fourth quarter 2024 earnings, exceeding expectations with an earnings per share (EPS) of $0.01, surpassing the anticipated loss of $0.0046. The company’s revenue also outperformed forecasts, reaching $109.3 million against a projected $99.86 million. Despite this positive earnings surprise, the stock experienced a decline in trading. Clean Energy Fuels has announced plans for significant capital expenditures in 2025, focusing on Renewable Natural Gas (RNG) projects, with a projected consolidated revenue of approximately $400 million for the year. The company plans to sell 246 million gallons of RNG and invest $104 million in upstream RNG production. Analysts have raised concerns about regulatory uncertainties and macroeconomic factors that could impact future profitability. However, Clean Energy Fuels remains strategically positioned within the RNG market, leveraging its extensive network of over 600 fueling stations and relationships with major fleet operators.
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