Alto Ingredients (ALTO) Stock Forecast & Price Target

Alto Ingredients Inc. is strategically positioned to achieve significant EBITDA expansion over the coming years, particularly through its long-term capital projects in primary yeast, cogeneration, and the rollout of corn oil and high-protein products. With plans to secure fixed price contracts for 90 million gallons of specialty alcohol sales in 2024, the company is moving towards diversifying its revenue streams beyond historical reliance on commodity prices, targeting steady profitability in the process. Notably, the adjusted EBITDA for the most recent quarter showed a strong recovery, posting a gain of $4.7 million compared to a loss of $20.6 million in the third quarter of 2022, highlighting the effectiveness of management’s focus on revenue diversification and margin improvement.

Alto Ingredients Inc. experienced significant revenue declines across multiple quarters in 2023, reporting a 16.7% year-over-year drop in 4Q23, a 5.6% decline in 3Q23, and a substantial 23.3% decrease in 1Q24, indicating a troubling trend in financial performance. The company's gross profits were adversely affected by volatile ethanol prices and increased transportation expenses, resulting in lower crush spreads and pressing gross margins, alongside a loss attributed to natural gas hedging activities. Furthermore, adjusted EBITDA expectations for 2024 have been revised downward from $65.9 million to $51.3 million, signaling a cautious outlook due to ongoing production challenges and shifting sales towards lower-margin products.