Seeking Alpha

Solazyme cut to Neutral from Buy at Goldman on limited near-term upside

  • Solazyme (SZYM -1.1%) is downgraded to Neutral from Buy with a $13.50 price target at Goldman Sachs, which sees limited upside for the stock in the near-term although the long-term growth story is intact.
  • The firm believes SZYM has executed well vs. peers, with its first two commercial-scale facilities now within months of coming online and delivering volume, but this catalyst appears to be reflected in the stock’s ~30% move since the end of January.
  • The firm adds that it is more guarded on the near-term path for catalysts given financial performance is likely to remain muted.
Comments (9)
  • Mark T. Phillips
    , contributor
    Comments (452) | Send Message
     
    First commercial scale facility is already online (Clinton/Galva) as of January 30th, yet Goldman writes that neither of their two production facilities are online?

     

    It's worth noting that the facility that came online has capacity of 20,000 MT/year and the next one (Moema) that is expected to come online in late Q1 or Q2 has capacity of 100,000 MT/year.

     

    Shares soared 30% the day the smaller facility came online; I'm not expecting nearly as large of a reaction when the Moema facility comes online but it is still a positive catalyst none-the-less.

     

    Another positive from the recent Solazyme CC was ASPs from their Clinton/Galva facility came in above expectations at $2,600/MT vs their guided $2,000/MT (though management continued to be conservative in their guidance with continued expectations of ASP of $2,000/MT).
    4 Mar, 10:12 AM Reply Like
  • LDweck
    , contributor
    Comments (20) | Send Message
     
    Whilst I can understand where Goldman is coming from I would argue that this is not the time to jump in and out of SZYM. I suspect there are many on the side lines who have been waiting for what would appear to be a successful and profitable commercial operation to be an actual reality. Thereafter the potential to expand worldwide will of course ignite as will the profits the company is capable of making world wide will drive the price. I am delighted with all the positives achieved by the company which are very much in line with my highest realistic expectations and continue to be so.
    The latest 30% increase is but one of many surges we are likely to see in this stock over the next 5 years. These surges are subject to less and less surprises that are likely to occur as reality is achieved. Timing these surges is a complication that most investors should steer well clear of, as this may invariably lead to missing these entirely. I can recount endless people complaining they intended to get back in but missed the surge and very few who have made a consistent success of predicting flat periods for one investment and predicting other companies more likely to surge in those flat periods as well as timing these to perfection.
    I and all other investors should be more than happy just to keep a stock that surges by 30% with prospects of even more surges into its rosy future. Constantly jumping in an out of such a stock is great for brokers but lunacy for anything but the most successful day traders who are exceedingly rare over a 5 to 10 year period. Investors do not make their money by generating income for brokers. Nor do they consistently make money by attempting to reach the impossible dream, of attempting to fill predictions of flat periods with predicted surges elsewhere. Especially when such predictions are so exceedingly far from perfect historically.
    4 Mar, 12:01 PM Reply Like
  • tgar13
    , contributor
    Comments (194) | Send Message
     
    When Goldman Cuts it means I should be
    Buying because I suspect they are
    4 Mar, 03:21 PM Reply Like
  • JeremySpoken
    , contributor
    Comments (89) | Send Message
     
    Let's see if the short interest winds down over the month of March. That'll give us an indication of what the investment banks really think.
    4 Mar, 03:29 PM Reply Like
  • Marc Freeman
    , contributor
    Comments (70) | Send Message
     
    Well said. At the risk of sounding defamatory, this is the same company that sold massive amounts of garbage to investors all over the world all the while shorting same investments. Worrying about GS in any regard is a waste of time. SZYM stands alone as a very unique opportunity and I for one will be happy to bide my time. Good luck to all. And good cheer!
    4 Mar, 03:31 PM Reply Like
  • PcArCi
    , contributor
    Comments (25) | Send Message
     
    Wow, wasn't this analyst at the CC? It is common knowledge that the Clinton facility is already online and producing stuff, yet this guy is saying that the facilities are months away from coming online. And Moema isn't month's away from coming online, it is already at the fermentation stage. Was this a deliberate attempt at manipulation? I don't know, but it does sound very strange to me.
    4 Mar, 06:04 PM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    Their target is still +10% while their SP500 target is something like +2-3% now. We should all be mindful of Muppets when we speak of GS and targets.
    5 Mar, 07:19 AM Reply Like
  • liebezeit
    , contributor
    Comments (33) | Send Message
     
    Guess that target's in the rear-view mirror now.
    12 Mar, 05:49 PM Reply Like
  • 6151621
    , contributor
    Comments (1174) | Send Message
     
    Be on the lookout for price target increase. I'm tempted to take some profits here but holding for now.
    13 Mar, 08:17 AM Reply Like
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