Problems persist at the oil maker, which commercializes its products in fuels and chemicals, nutrition, and skin care, analysts said.
"Solazyme has failed to achieve its cost goals as it struggles to ramp its new Brazil plant, in our view, and it will now operate at sub-scale in an effort to preserve cash," Pacific Crest analyst Weston Twigg said.
"Solazyme announced that it will run both its Clinton/Galva operation (the Archer Daniels plant) and its new Moema, Brazil, operation (the Bunge JV plant) below nameplate capacity as the company focuses on just a few high-margin product opportunities in an effort to preserve cash while it works through production issues at the Moema site," Twigg added.
Separately, TheStreet Ratings team rates SOLAZYME INC as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SOLAZYME INC (SZYM) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 66.2% when compared to the same quarter one year ago, falling from -$25.83 million to -$42.92 million.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, SOLAZYME INC's return on equity significantly trails that of both the industry average and the S&P 500.
- Net operating cash flow has decreased to -$21.90 million or 14.97% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, SOLAZYME INC has marginally lower results.
- The debt-to-equity ratio of 1.25 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 9.95, which shows the ability to cover short-term cash needs.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 35.84%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 33.33% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- You can view the full analysis from the report here: SZYM Ratings Report