NEW YORK (AP) — Shares of Solazyme climbed nearly 14 percent on Thursday as the biofuels company announced deals with Bunge Ltd. and Archer-Daniels-Midland Co. Its third-quarter loss was also smaller than expected.
THE SPARK: Solazyme said Wednesday that its joint venture deal with Bunge aims to increase production capacity, broaden the portfolio of oils produced and work on joint market development for tailored food oils in Brazil. The agreements with ADM include production of Solazyme's tailored algal oils in ADM's advanced fermentation plant in Clinton, Iowa.
Also on Wednesday Solazyme reported a third-quarter adjusted loss of 32 cents per share on revenue of $8.6 million. Analysts polled by FactSet expected a loss of 38 cents per share on revenue of $8.8 million.
THE ANALYSIS: Pavel Molchanov of Raymond James & Associates said in a client note that the company's better-than-expected third-quarter performance complements the agreements with Bunge and ADM. The analyst had predicted a quarterly loss of 35 cents per share.
Molchanov said that he'd already been accounting for some additional production capacity from the Bunge partnership in his long-term view, but the new ADM agreement is "icing on the cake."
He kept an "Outperform" rating on Solazyme and lowered the company's price target to $12 from $14.50.
SHARE ACTION: Solazyme Inc. shares rose 97 cents, or 13.8 percent, to $8.07 in midday trading. The stock has traded in a 52-week range of $7.01 to $16.31. For the year to date, the stock is down 43 percent.