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Why Aemetis Stock Rallied as Much as 17% Today

What happened

Shares of Aemetis (NASDAQ: AMTX) were higher by roughly 17% at 1 p.m. EDT. The renewable fuels and biochemicals company didn't release any specific news today that would have elicited such a dramatic rise in price. But a Credit Suisse analyst did.

So what

Manav Gupta of Credit Suisse started coverage of Aemetis with an outperform rating. The stock was given a price target of $35 per share, which is roughly 75% above where the stock closed on March 19, the previous trading day. Investors often buy a stock when it is added to coverage with a favorable rating. The lofty price target probably didn't hurt, either.

Image source: Getty Images.

Gupta said Aemetis will benefit materially as the world moves toward a lower carbon future. Specifically, the analyst expects the company to be levered to renewable natural gas growth. Also highlighted was the company's efforts to develop renewable jet and diesel fuels. Clean energy is a hot topic today, so it's not surprising that investors jumped on the analyst update here and bought the stock.

Now what

There is clearly a huge amount of opportunity as the world tries to find ways to reduce its carbon footprint. Aemetis may or may not end up a big winner. That said, investors have been treated to a massive 3,100% price advance over the past year. In other words, a lot of good news is already priced in. Long-term investors should probably tread with care. Despite the exciting opportunities Credit Suisse is highlighting, stocks that go up impressively sometimes reverse course just as dramatically.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.


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