Codexis loss widens in Q1, as detergent alcohols R&D weighs

May 14, 2012 |

In California, Codexis has released its Q1 financial results, with a loss of $0.21 per share, reflecting lower gross margin and high R&D costs for the ongoing development of Codexol detergent alcohols.

Also, the company’s relationship with Shell seems uncertain as their current agreement approaches expiration. The company identifies its main risk as the “lack of visibility on the timing of biofuels commercialization”.

Raymond James energy analyst Pavel Molchanov wrote: “While Codexis’ detergent alcohol partnership with Chemtex provides some business diversification, Codexis remains dependent on Shell and its Brazilian joint venture, Raizen.  Codexis is  in final discussions with Raizen, the JV between Shell and Cosan, for a two-year project to deploy Codexis’ enzymes for Gen1 ethanol production, with commercialization expected in 2014. The timeline for Gen2, however, remains hazy.  In the absence of positive EPS until 2015 at the earliest, we apply a discounted cash flow (DCF) approach, the same as we do with peers. Our DCF estimate is $7.48 per share, with the stock currently at 45% of DCF.”

Piper Jaffray analyst Mike Ritzenthaler wrote: “We maintain our Underweight rating. Although cellulosic enzyme discussions have started with Raizen, the path to commercial biofuels remains unclear. Management disclosed that they have started discussions with Raizen on the potential use of cellulosic enzymes for use with bagasse – but it is unclear whether Shell will ultimately bless such an arrangement, though Shell is aware of the talks. Maintain Underweight rating, price target goes to $3. Management reaffirmed FY12 guidance yesterday of: revenues flat y/y, EBITDA greater than $0, and equivalent cash burn to last year.”

Category: Fuels

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