Meet FutureFuel, Roth Capital's Latest Bullish Target

• Roth Capital recently upgraded FutureFuel Corp. FF to a Buy.
• The firm also boosted its price target from $12 to $13.
• Shares of FutureFuel are down more than 2 percent on Monday trading.

In a recent report, Roth Capital analyst Craig Irwin upgradad shares of FutureFuel to Buy, while increasing his price target by $1, to $13, on the renewal of an agreement to supple bleach activator to Procter & Gamble Co PG, which raises visibility for the year to come.

In addition, the thee year contract includes a few adjustments like “favorable pricing that helps offset the impact of lower volumes, and broader access to P&G's relevant intellectual property.” In fact, the experts believe the company can now sell the exact same NOBS product to other customers – and they believe many companies will find it appealing. Furthermore, although there are still no certainties, FutureFuel seems to be gaining traction engaging other companies for possible supply of bleach activator.

Finally, the report assures, the firm sees the Chemicals operations as “a key asset at FutureFuel driving cash flows and earnings during periods of biodiesel profit uncertainty.” Consequently, and seeking to reflect the higher volumes of bleach activator, the analysts boosted their 2016 estimates and, thus, their price target on the stock, using a 5.0x EV/EBITDA multiple on their 2016 estimate of $74.2 million.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.