Truist cuts REX American stock target to $50, maintains buy

On Thursday, Truist Securities adjusted its financial outlook for REX American Resources (NYSE:REX), reducing the price target to $50 from the previous $55, while still recommending the stock as a Buy. The adjustment came despite REX American Resources’ shares rising 5.5%, contrasting with a 1.3% decline in the broader Sustainability group, as represented by the ICLN index. Trading at a P/E ratio of 11.9x and showing strong financial health according to InvestingPro metrics, the stock appears undervalued relative to its fundamentals.

The company’s recent quarter performance was noted as solid, with REX shares outperforming on a day when the market for sustainability stocks trended downward. With a beta of 0.92, InvestingPro data shows the stock typically trades with low volatility. REX American Resources has been effectively managing the components of its carbon capture, utilization, and storage (CCUS) and ethanol expansion project that are within its control. The company has also been actively buying back shares over the past several months, supported by its strong balance sheet and profitable operations, with diluted earnings per share of $3.82 over the last twelve months.

Truist Securities highlighted that, like other companies in the sector, REX American Resources is affected by policy uncertainty that could continue to cast a shadow over its near-term prospects. Despite these challenges, REX is described as being prudent with its capital allocation while still generating free cash flow (FCF) during this interim period.

The revised price target of $50 reflects a valuation more aligned with the average of REX’s peers, according to Truist Securities. The firm’s analysts have adjusted their estimates accordingly while reiterating their Buy rating on the stock, signaling confidence in the company’s ongoing performance and financial strategy.

In other recent news, REX American Resources reported impressive financial results for Q1 2025, with earnings per share (EPS) reaching $0.63, which significantly outperformed the forecasted $0.27. The company’s revenue also exceeded expectations, coming in at $158.23 million compared to the projected $151.54 million. This marks the continuation of REX’s strong financial performance, maintaining profitability for 18 consecutive quarters. Additionally, REX completed significant infrastructure projects, including a carbon capture facility, which aligns with their strategic growth initiatives. Despite a decrease in gross profit from the previous year, the company remains financially robust with $359.1 million in cash and equivalents and no bank debt.

Analysts have taken note of REX’s achievements, with Truist Securities expressing interest in the company’s capital budget and project timelines. REX has also been active in its share repurchase program, buying back approximately 373,000 shares in the fiscal fourth quarter and an additional 282,000 shares in the first quarter of 2025. The company’s leadership remains optimistic about future prospects, projecting continued success in upcoming quarters. The completion of the carbon capture facility and potential capacity expansion are expected to contribute positively to REX’s financial health.

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