Shares of Ceres Inc. rose 77 percent on Wednesday as the agricultural biotech’s beaten-down stock benefited from an analyst who previewed good news expected in the next several weeks.
The Thousand Oaks developer of genetically modified seeds for biofuel crops is expected next month to announce a strong harvest for sweet sorghum crops now being tested in Brazil, a key market for the company.
Pavel Molchanov, an analyst at Raymond James & Associates in St. Petersburg, Fla., wrote in a Tuesday investors note that the yield announcement is a key commercialization milestone for the company, so now might be a good time to buy a stock that has languished over the last six months.
“Ceres is a story stock, and in the absence of news has had a hard time,” Molchanov said after Wednesday’s market reaction. “I think the market now realizes that the stock was way oversold and is waking up to its potential.”
Shares, which closed at $1.97 on Monday on the Nasdaq, gained 12 percent on Tuesday, then jumped $1.70 to close at $3.90 on Wednesday. Before Tuesday, shares had been down 57 percent since the beginning of the year.
A record drought in Brazil last year significantly depressed yields for what should have been Ceres’ big debut. Weather in the South American country has been significantly better this year, and the company hinted in its last quarterly report that crops have been faring well.
Molchanov has an “outperform” recommendation on Ceres stock, and a 12-month price target of $7 a share.