Pacific Ethanol Shares on the Moveadmin
Shares of Pacific Ethanol Inc. rose in Tuesday afternoon trading after the ethanol producer swung to a third-quarter profit that beat Wall Street expectations.
The stock rose $1.05, or 6 percent, to $18.54 in midday trading on the Nasdaq.
Pacific credited higher ethanol prices and volumes for its 7-cent per share profit, compared to a year-ago loss of 3 cents per share.
But Bank of America analyst Eric K. Brown warned that the strong earnings aren’t indicative of future results for a variety of reasons, including a share count rising to 50 million.
“We expect that Pacific Ethanol’s share count will increase significantly in the next several quarters due to convertible preferred shares, shares used for acquisitions, and restricted stock grants,” Brown wrote in a client note.
Brown, keeping a “Sell” rating on the shares, also said Pacific’s bottom line performance now depends on production, not its marketing business, which was credited for Pacific’s strong third-quarter results.
Friedman Billings Ramsey analyst Jacques Rousseau kept a “Market Perform” rating and raised his 2006 earnings estimate to 10 cents per share from 5 cents per share.
But Rousseau noted capital costs are approaching $2 per gallon, as Pacific started production at a plant in Madera, Calif. during the quarter.
“The company increased its cost expectations for the Madera, Calif., plant from $64 million to $66 million, or $1.90 per gallon,” Rousseau wrote in a note to investors.