Blazing Star Merger Sub completes Walgreens debt tender offer
On Friday, CIBC adjusted its stance on shares of Tidewater (NYSE:TDW) Renewables Ltd (LCFS:CN), moving the rating from an Outperformer to a Neutral position. The firm also slashed the price target to Cdn$4.50 from the previous Cdn$12.00. The downgrade reflects concerns over the LCFS credit market's uncertainty and the potential for increased shareholder dilution due to a tight liquidity situation.
The company's High-Density Renewable Diesel (HDRD) facility has shown strong operating performance, yet it faces challenges in the LCFS credit market. During the first half of 2024, Tidewater Renewables sold renewable diesel credits at an average price of Cdn$450. However, for the third quarter of 2024, the company was unable to secure any bids, a stark contrast to the initial guidance of Cdn$450-Cdn$500 and CIBC's estimate of Cdn$475.
The British Columbia government reported that in July, only two BC LCFS emission credit sales occurred, with an average price of Cdn$207. This significant drop is attributed to the influx of subsidized U.S. renewable diesel into the BC market, which has contributed to the depressed credit prices.
Consequently, this lack of pricing visibility in the LCFS credit market has substantially reduced the company's cash flow visibility, prompting the downgrade in stock rating and price target.
CIBC's revised valuation is based on an EV/EBITDA approach, taking into account the current market conditions and the risks posed to Tidewater Renewables. The new stock price target represents a considerable decrease from the previous valuation, indicating the firm's recalibrated expectations for the company's financial performance amidst market uncertainties.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.