DAR: Feed And DGD Upside Is Expected To Drive Bullish Rebound

Analysts lifted their price target on Darling Ingredients to US$50 from US$44, citing expected Q4 EBITDA of US$284m ex-LCM, which they estimate is about 6% above consensus and mainly supported by Feed and DGD contributions.

Analyst Commentary

Bullish Takeaways

• Bullish analysts see the higher US$50 price target as reflecting improved confidence in Darling Ingredients' ability to execute against current expectations, rather than a shift in the business mix.
• The projected Q4 EBITDA of US$284m ex-LCM, which analysts estimate is about 6% above consensus, is viewed as a sign that current operations may be tracking ahead of what the market is pricing in.
• Feed and DGD are highlighted as key contributors to the Q4 estimate, which bullish analysts see as supporting the earnings base that underpins their valuation work.
• By anchoring the price target to a specific EBITDA figure, bullish analysts frame the stock as being supported by tangible near term cash flow expectations instead of more speculative long term assumptions.

Bearish Takeaways

• More cautious analysts may question how sustainable a single quarter EBITDA estimate of US$284m ex-LCM is, especially if a large portion is concentrated in Feed and DGD.
• If actual Q4 results do not align with the estimated 6% beat versus consensus, there is potential for the market to reassess the uplift to the US$50 price target.
• The focus on Feed and DGD leaves open the question of how other parts of the business will contribute to future EBITDA, which could be a concern for investors looking for a more evenly balanced earnings profile.
• Some investors may view the higher target as already incorporating a strong Q4 outcome, which can limit upside if subsequent quarters do not show similar support for EBITDA at this level.

What's in the News

• Darling Ingredients signed a definitive agreement with Tessenderlo Group to combine their collagen and gelatin segments into a new company focused on collagen based health, wellness and nutrition products, with no cash or initial investment required from either party (Key Developments).
• The combined collagen and gelatin business is expected to have initial annual revenue of about US$1.5b and capacity of roughly 200,000 metric tons across 22 facilities in South America, North America, Europe and Asia (Key Developments).
• Darling Ingredients will hold an 85% stake in the new collagen and gelatin company, while Tessenderlo Group will own 15%, with the structure targeting long term synergies and product development under the Nextida portfolio, subject to regulatory approvals and a targeted closing in 2026 (Key Developments).
• From June 29, 2025 to September 27, 2025, Darling Ingredients repurchased 0 shares for US$0, and has completed the repurchase of 11,617,466 shares, representing 7.17% of shares, for a total of US$516.75m under the buyback announced on August 13, 2015 (Key Developments).

Valuation Changes

• Fair Value: updated from US$47.00 to about US$47.46 per share, a very small adjustment in the model output.
• Discount Rate: kept effectively unchanged at about 6.96%, indicating no meaningful shift in the assumed risk profile.
• Revenue Growth: updated from about 3.41% to about 3.72%, a modestly higher growth assumption in the forecast period.
• Net Profit Margin: adjusted from about 9.17% to about 8.84%, reflecting a slightly lower profitability assumption on future earnings.
• Future P/E: moved from about 15.13x to about 15.72x, a small increase in the multiple applied to projected earnings.