UPDATE: Wedbush Downgrades Darling Following 2014 Biodiesel RVO Proposal By EPA

In a report published Sunday, Wedbush analyst Craig Irwin downgraded Darling International DAR from an Outperfom rating to a Neutral rating and lowered the price target from $26.00 to $20.00. In the report, Wedbush says "On Friday, EPA proposed a 1.28bn gal ‘14 biodiesel RVO, below our 1.5bn gal base scenario we originally based on statutory growth requirements in the Renewable Fuels Standard (RFS2). Details in RFS2 make it likely Obligated Parties will carry-forward compliance credits, driving even lower biodiesel production likely in around the 1.0bn gal range. Considering 2013 is currently tracking for ~1.7bn gal in production, a 700m gal 2014 decline would drive a 2.5m MT headwind for biodiesel feedstock demand. A big 20%+ chunk of biodiesel fats demand would be expected to be met with rendered fats products inside a total rendered fats market of around 4.2m MT. In our view, the Biodiesel RVO was likely victim of structural problems with the ethanol mandates at unachievable levels, leaving room for future positive changes. Falling biodiesel demand should directly translate into weak demand and pricing in rendered fats." Darling closed on Friday at $21.47.