Biofuels earnings season: Gevo, Codexis in focus

In New York, it is earnings season, and Codexis and Gevo both reported results below Street expectations on Friday.

Gevo – GEVO.

Gevo reported a $9.3 million loss for the quarter, with an adjusted EPS of $(0.76), below the Street consensus of $(0.52). Revenue from corn ethanol sales was in line, but gross margin came in lower than expected amid surging corn prices.

Pavel Molchanov of Raymond James commented, “While fully recognizing the inherent execution risks in an early-stage story such as this, we believe Gevo is well positioned to be a leader in the Gen2 biofuel space, with a unique market niche, a distinct value proposition, and a wide range of industry partners. We reiterate our Outperform rating, with a target price of $26.00.”

Codexis – CDXS

Codexis reported a net loss of ($3.5) million, or ($0.10) per share, below the Street consensus of $(0.07). This compares to a net loss of ($1.4) million or ($0.50) per share during the first quarter of 2010.  Q1 revenues were $31.0 million, an increase of 21% from $25.7 million in the first quarter of 2010.  Product revenue of $12.9 million increased 106% over the same time period driven by more than $5 million in sales of the boceprevir intermediate to be used in Merck’s investigational Hepatitis C drug trade named Victrelis.

Of Codexis, Molchanov said, “We see Codexis as a biofuels story, first and foremost, and its strategy is heavily dependent on Shell, which – like all supermajors – tends to move slowly especially with regard to new technologies.  Within this context, the main risk we see is the lack of visibility on the timing of biofuels commercialization.  While Codexis’ efforts to diversify into carbon capture and bio-based chemicals carry positive long-term potential, they are still largely conceptual.  Balancing Codexis’ opportunity to be an early mover in Gen2 biofuels with the uncertain timeline for commercialization, we maintain our Market Perform rating.”