That led Craig Hallum analyst Eric Stine to raise his price target on Vertex to $25 from $13, keeping his buy rating.
Vertex Energy, Houston, recently traded at $13.07, up 27%. They've traded on Tuesday up as much as 35% at $13.88. The stock started the year at 71 cents.
The asset sale will help Vertex become a vertically integrated producer of renewable diesel, Stine said, according to Bloomberg. And the company’s profit may surpass its target.
As for the sale, Vertex is unloading its portfolio of used-motor-oil-collection and -recycling assets to Safety-Kleen Systems, a subsidiary of peer environmental-services company Clean Harbors (CLH) - Get Clean Harbors, Inc. Report, Norwell, Mass. At last check, CLH shares were up 0.7% at $91.40.
The transaction is expected to close in the third quarter.
Earlier in the month Stifel raised its price target on Vertex stock to $17 from $2, maintaining its buy rating.
The investment firm moved after Vertex agreed to buy an Alabama refinery from Royal Dutch Shell (RDS.A) - Get Royal Dutch Shell Plc Sponsored ADR Class A Report (RDS.B) - Get Royal Dutch Shell Plc Sponsored ADR Class B Report for $75 million. Vertex will acquire the Mobile Chemical LP Refinery and associated logistics assets.
"Vertex thinks the hydrocracker conversion cost is significantly less than a greenfield project to produce renewable diesel," Stifel analyst Michael Hoffman said in a note titled in part "Did Not See this Coming."
He values the company's legacy assets at $2 and the addition of the Shell refinery at another $15, with "an assumption for some walk down of subsidies."