Darling Ingredients enters the back half of May with a rare combination: a wall of analyst upgrades pushing targets higher, and short sellers quietly reducing exposure at the fastest weekly pace in months.
The most striking development this week came from JP Morgan. On May 12, Thomas Palmer lifted his target to $79, maintaining an Overweight rating, just a day after Q1 results landed. That capped a remarkable run of target raises from across the Street — JP Morgan, Jefferies, TD Cowen, Baird, UBS, Scotiabank, and Stephens & Co. have all moved higher on DAR since late March, with not a single downgrade in the bunch. The consensus mean target now stands at $76.42, implying roughly 20% upside from the current $63.46 close. The direction is unambiguous: the Street is getting more constructive, not less.
The short side tells the same story from a different angle. SI dropped nearly 18% in a week to 3.7% of the free float — down from a peak of around 4.6% earlier in May. That collapse came immediately after the Q1 earnings print on May 11, suggesting shorts who had built positions ahead of results quickly covered when the numbers didn't give them what they needed. Borrow conditions are easy throughout: cost to borrow runs at just 0.49% annually, and availability is loose, with the 52-week utilization peak sitting at a modest 5.17%. There is no squeeze dynamic here, and the ORTEX short score of 33.6 — down from 36 last week — reflects the easing pressure. The lending market is not a source of tension.
Options positioning has drifted slightly more cautious. The put/call ratio is running at 0.49, modestly above its 20-day mean of 0.45 and about one standard deviation elevated. That is approaching but not at the 52-week high of 0.51 touched in late April. The z-score of 1.1 is worth noting, but not alarming — options traders are carrying a bit more downside protection than usual, not pricing in a major dislocation. Peers BG and ADM diverged on the week, with Bunge slipping 3.2% while ADM managed a 1.9% gain, suggesting the agricultural processing sector lacked a strong directional tide.
Valuation gives bulls ammunition but also a caveat. The EV/EBITDA multiple sits near 7.9x on a trailing basis, and the PE ratio is 13.2x — down about 3 turns over the past month, making the stock cheaper even as the price has recovered 3.6% over 30 days. The earnings-per-share momentum is exceptional, ranking in the 99th percentile over both 30 and 90 days, and forward EPS growth ranks in the 90th percentile year-over-year. The company's $1.79 billion in estimated EBITDA on $6.7 billion in revenue frames a business that generates cash, even if the EV/EBIT at 10x suggests the market is still assigning a moderate rather than premium multiple. The analyst consensus differential — ranked at just the 10th percentile — hints that the buy ratings are not yet matched by street-wide conviction, leaving room for further upgrades to close the gap.
Insider activity is light and not materially informative. The Chief Accounting Officer sold $192,000 worth of shares at $63.89 on May 1, a routine disposal. The March activity was dominated by equity awards to senior executives, which are standard compensation events. The 90-day net figure is positive in share terms but driven almost entirely by award grants rather than open-market purchases — nothing here changes the fundamental read.
The next scheduled earnings date is July 30. Between now and then, the key variable is whether the Street's upgrade cycle has run its course or has further room to move — with the mean target at $76 and the stock at $63, the gap between price and consensus is wider than usual for a name with this level of analyst coverage.
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