"Despite a tightening spread, Clean Energy continues to win contracts, increase gallons delivered, innovate on its offerings, and improve its customer footprint," analysts said.
However, they highlighted some key risks to the price target increase, including delays in the construction of stations or NGV engines, idling stations, increased competition, and a sustained decline in oil prices.
The price target hike comes after United Parcel Service (UPS) announced in early May that it would use renewable natural gas from Clean Energy Fuels for some of its delivery fleet, The Wall Street Journal reported.
Clean Energy Fuels' renewable gas, called Redeem, is the first renewable natural gas available in commercial quantities.
In Tuesday's midday trading, shares of Clean Energy Fuels are declining 4.63% to $7.74.
TheStreet Ratings team rates CLEAN ENERGY FUELS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate CLEAN ENERGY FUELS CORP (CLNE) a SELL. This is driven by a number of negative factors, 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 feeble growth in its earnings per share, disappointing return on equity, poor profit margins, 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:
- CLEAN ENERGY FUELS CORP's earnings per share declined by 13.3% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, CLEAN ENERGY FUELS CORP reported poor results of -$0.95 versus -$0.71 in the prior year. For the next year, the market is expecting a contraction of 10.5% in earnings (-$1.05 versus -$0.95).
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CLEAN ENERGY FUELS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for CLEAN ENERGY FUELS CORP is rather low; currently it is at 24.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -36.28% is significantly below that of the industry average.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, CLNE has underperformed the S&P 500 Index, declining 15.26% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio of 1.44 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 2.84, which shows the ability to cover short-term cash needs.
- You can view the full analysis from the report here: CLNE Ratings Report