Raymond James upgraded its near-term outlook for Darling Ingredients (NYSE: DAR) by nudging its price target to $70.00 from $69.00 and reaffirming a Strong Buy recommendation. The modest $1.00 change in target accompanies a positive view from the firm about where the renewable fuels sector is headed.
In its note, Raymond James pointed to an industry-level inflection point in renewable fuels despite what it described as several challenging macroeconomic years. The analyst team emphasized that Darling's established Feed and Food business lines supply operational advantages to its sustainable fuels activities over the long term.
The research memo also highlighted Darling’s stake in Diamond Green Diesel (DGD), a joint venture that Raymond James sees as maintaining a significant footprint and a first-mover advantage in renewable diesel and sustainable aviation fuel markets. According to the firm, margin indicators within those businesses are showing signs of improvement, supporting a more constructive outlook.
Raymond James further noted that Darling’s upstream core operations bolster its strategic positioning over a multi-year horizon. The firm expects ongoing recovery in both the underlying business performance and the company’s trading multiple through 2027 and beyond.
While the price target change was small, the rating remained Strong Buy, signaling continued conviction in Darling’s medium-term opportunity from the analyst's perspective.
Separately, Darling Ingredients released fourth-quarter results that painted a mixed picture. Adjusted earnings came in at $0.35 per share, narrowly above the $0.34 consensus estimate. Revenue for the quarter totaled $1.71 billion, beating the $1.54 billion consensus and representing a 20.6% increase from $1.42 billion a year earlier.
Despite those topline and adjusted-earnings beats, the quarter included substantial restructuring charges and a year-over-year decline in net income. Those issues contributed to negative investor reaction, and the company’s shares dropped 3.7% after the report.
Raymond James indicated that Darling’s legacy businesses and the DGD joint venture provide durable advantages as renewable-diesel and sustainable-aviation-fuel markets evolve. Market participants will continue to watch how restructuring actions affect future profitability and whether margin trends in the renewable fuels segment sustain the analyst’s expected recovery into 2027.
Summary
- Raymond James raised Darling’s price target to $70 from $69 and kept a Strong Buy rating, citing an inflection in renewable fuels markets and structural advantages from legacy businesses.
- Diamond Green Diesel JV is viewed as a first-mover in renewable diesel and sustainable aviation fuel, with improving margin indicators.
- Darling’s Q4 beat on revenue and adjusted EPS but reported heavy restructuring charges and a YoY decline in net income, prompting a 3.7% share drop.
Key points
- Analyst action - Price target increased to $70 and Strong Buy rating maintained; impacts investor sentiment in equity markets.
- Business positioning - Feed and Food divisions are cited as long-term advantages for Darling’s sustainable fuels operations; relevant to energy and agribusiness sectors.
- DGD JV - The joint venture's first-mover positioning in renewable diesel and SAF supports margin recovery expectations; relevant to the renewable fuels and aviation fuel markets.
Risks and uncertainties
- Restructuring charges - Significant restructuring costs in the reported quarter create uncertainty around near-term profitability; this affects investor confidence and the company’s earnings trajectory.
- Net income decline - A year-over-year drop in net income despite revenue growth raises questions about operational headwinds and margin pressure in the short term.
- Market sensitivity - Although Raymond James expects recovery into 2027, that timeline depends on renewable fuel margin improvements and broader market conditions, which remain variable.