Goldman Sachs Initiates Solazyme With A Buy

Goldman Sachs is initiating coverage on Solazyme, Inc. SZYM with a Buy rating and a $31 price target. In a note to clients, Goldman Sachs writes, "We initiate coverage of Solazyme with a Buy rating and a $31, 12-month price target, driven by new capacity and product commercialization that should lessen the risk profile. Solazyme produces oils by feeding sugar to algae in a fermentation process. Without subsidies, we think Solazyme's tailored oils can sustain higher margins relative to commodity, plant-based oils. We view the main near-term market opportunity as oleochemicals, but with additional opportunities in food, skin care, diesel, and jet fuel. We modestly forecast 2011/2012/2013 revenue of $46 mn/$55 mn/$164 mn and adjusted EPS of ($0.78)/($0.70)/($0.12), with cash-flow breakeven in 2014." Shares of SZYM gained 79 cents yesterday to close at $24.50, a gain of 3.33%.