UPDATE: Wedbush Initiates Darling International at Outperform on Good Market Position

In a report published Friday, Wedbush analyst Craig Irwin initiated coverage on Darling International DAR with an Outperform rating and $23.00 price target.

In the report, Wedbush noted, “Initiating coverage on Darling at OUTPERFORM with a $23 price target. Darling is the largest independent renderer in the food-to-fuel supply chain. We believe the company is well positioned to benefit from strong growth in biodiesel markets, both as a feedstock supplier, and as an emerging green biodiesel producer with its Diamond Green Diesel JV with Valero. Rendering market headwinds appear to have slowed, with ~50% expected growth in 2014 biodiesel production over 2012 levels providing a tailwind. We expect the EPA to issue a ‘14 biodiesel Renewable Volume Obligation (RVO) of 1.5-1.7bn gal, up from 1.28bn gal in ‘13 and 1.0bn gal in ‘12. Our forecast of 500m gal higher production implies 1,800k MT higher feedstock demand, and we see it as reasonable to expect 30%-50% will come from fats like those offered by Darling. Higher demand should translate into profit, while headwinds from biodiesel producers' adoption of inedible corn oil as a feedstock appear mostly over.”

Darling International closed on Thursday at $18.89.