Neste’s Mixed Market Position: Operational Improvements Amidst Renewable Product Oversupply

In a report released today, Jason Gabelman from TD Cowen maintained a Hold rating on Neste, with a price target of $8.00.

Jason Gabelman has given his Hold rating due to a combination of factors that reflect both positive and challenging aspects of Neste’s current market position. The company has shown improvement in its Renewable Products segment, with a significant reduction in fixed costs and an increase in margins. These operational enhancements are expected to be more sustainable, providing a stable foundation for future performance. However, the market for renewable products remains oversupplied, which Neste itself acknowledges, creating uncertainty about future margin stability.
Despite strong quarterly results and outperforming its largest US peer, Neste’s stock has exhibited volatility, with gains often retracting shortly after earnings announcements. This pattern of volatility makes it challenging to predict future stock performance reliably. Additionally, while the company has made strides in cost reduction and operational efficiency, the oversupply in the global biofuels market and uncertain demand dynamics, particularly in the Sustainable Aviation Fuel segment, contribute to the cautious outlook. As a result, Gabelman maintains a Hold rating while adjusting the price target to reflect the improvements in cost structure.

In another report released on July 25, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $9.00 price target.