Within the clean technology sector, increased activity from the capital markets and a movement toward commercialization for several companies are supporting a bullish outlook on the biofuel and biochemical space, and attracting attention from the investor community, says Ben J. Kallo, CFA, Senior Research Analyst at Robert W. Baird & Co.
“I think the investors that want to play in the space have taken the approach of buying a little bit of each of the public companies, and using kind of a basket approach, which you would sometimes see similar to a biotech investor, so rotating out of some of the companies that hit some roadblocks into some of the companies that seemed to be farther long in their growth roadmap,” he said.
Kallo has an “outperform” rating on Solazyme, Inc. (SZYM) and calls it one of his favorite names in the biofuel space. He says the company’s partnerships and investors are some of the best in the industry, as well as its technology that develops tailored oils using algae, which allows SZYM to capture higher ASPs for its products and attack different markets.
“They had a very successful IPO; they have a good cash position, which will allow them to execute on their plan. Again, like I said, they have good partnerships and some of their partners are actually contributing capital, a portion of capital for production facilities, if not all the capital in some cases,” Kallo said.
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