Neste Oil Oyj, Finland’s only oil refiner, rose to its highest in a week as Pohjola Bank raised its recommendation on the shares and said next year’s profit from renewable fuels will drive the stock price.
Neste climbed as high as 7.84 euros in Helsinki trading, adding 2.5 percent to 7.82 euros at 11:52 a.m., extending gains for a third consecutive day. The company was the day’s second-biggest gainer on the OMX Helsinki 25 Index.
Pohjola raised its recommendation from accumulate, setting its sights on Neste’s 2013 earnings, the bank said in a note today. Renewable fuels produced by the Espoo-based company are attractively valued in the share price, Pohjola said, predicting a profit of 74 million euros ($92.9 million) for the unit next year. The unit had a 170 million-euro operating loss in 2011.
Demand for renewable fuels is increasing as tightening regulation and rising prices reduce the use of fossil fuels. The price of crude oil has tripled in 10 years, propelling a search for alternative raw materials for energy production.
Neste Oil is making diesel for cars and trucks using fat from gutting pangasius, an Asian catfish. Deutsche Lufthansa AG tested its renewable aviation fuel, saying it's “ready for use in daily aircraft operation,” according to a March 15 statement.
Neste Oil also benefits from the euro’s weakening versus the dollar as it incurs most costs in euros and its sales are dollar-denominated. Pohjola kept its 12-month target price for Neste Oil at 10.50 euros.