Renewable Energy

Solazyme Slumps Most on Record on Delays at Brazil Plant

Solazyme Inc. (SZYM), a producer of renewable oils from algae, declined the most on record after its third-quarter revenue fell short expectations

Bloomberg
07/11/2014 19:03
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Solazyme Inc. (SZYM), a producer of renewable oils from algae, declined the most on record after its third-quarter revenue fell short expectations and it said sales next year will miss estimates even more.

 

Solazyme tumbled 58 percent to $3.14 at the close in New York, the most since its May 2011 initial public offering and the lowest price on record.

 

Revenue in the third quarter was $17.6 million, South San Francisco, California-based Solazyme said in a statement after the close of trading yesterday. That was lower than the $19.6 million average of eight analysts’ estimates compiled by Bloomberg.

 

Production issues at the company’s plant in Moema, Brazil, led Solazyme to lower its revenue forecast for 2015 to about $75 million, well short of the $300 million estimate from Jeff Osborne, an analyst with Cowen & Co.

 

“The loss of Moema’s rapid volume-growth expectations” were among the “primary concerns for our more cautious view on the stock,” Osborne wrote in a note to investors today. He lowered his rating to the equivalent of hold with a 12-month price target of $7. Solazyme also was downgraded today by Robert W. Baird & Co. and yesterday by Pacific Crest Securities LLC.

 

Excluding some items, the company’s loss of 45 cents a share was three cents more than the average of nine estimates compiled by Bloomberg.

 

The company began commercial production of oil and lubricants at Moema in May, and said it expected to reach full capacity of 100,000 metric tons a year within 12 to 18 months.

 

“Management has noted that despite delays, it expects to fully bring Moema onto its balance sheet in 2016, albeit not producing at the previously intended annual capacity,” Osborne said. “We expect the Moema run rate to fall short of 20,000 metric tons a year by 2016.”

 

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