Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : $2 or higher gas - Can ethanol make a comeback? -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (2549)	8/3/2007 1:09:26 PM
From: richardred	Read Replies (1) \| Respond to of 2801

Oversupply Threatens VeraSun Thursday August 2, 3:18 pm ET By Zacks Equity Research Zacks senior analyst Matthew Thurmond has a negative view on the ethanol group currently, which helps explain why he is reiterating his Sell recommendation on shares of VeraSun Energy (NYSE: VSE - News): We are maintaining our Sell rating on shares of VeraSun. While VSE has very favorable top-line growth prospects due to its recent and planned capacity expansions, we have a negative outlook on the long-term future of the ethanol industry as a whole. Namely, there are very few barriers to entry and producers are subject to corn, natural gas, and oil price fluctuations. Due to what we perceive as a near-term oversupply threat, we have lowered our target price to $14. Full-year 2007 EPS [earnings per share] is expected at $0.37 per share and 2008 EPS is expected at $0.97. Producing ethanol is a capital intensive, commodity business with very low barriers to entry. Also, producers are subject to the volatile price spreads between corn and crude futures. The uncertain long-term demand picture also makes us cautious. While we agree that political winds currently favor ethanol, if that were to change, the government may not substantially increase renewable fuel production mandates after 2012. Read the full analyst report on VSE biz.yahoo.com