Calumet Renewables Expansion Is Unlocking Value: Analyst

BofA Securities analyst Conor Fitzpatrick initiated coverage on Calumet, Inc CLMT with a Buy rating and a price forecast of $15.

The analyst noted that Calumet’s Montana Renewables unit is advancing its MaxSAF project to boost sustainable aviation fuel output from ~40 million to over 250 million gallons annually, aiming to tap into stronger pricing and subsidy benefits over renewable diesel and petroleum.

According to Fitzpatrick, the expansion is expected to nearly double EBITDA from 2025 to 2027 and is supported by interest-free DOE loans, reducing execution risk.

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Management plans to monetize the asset to cut debt, which could bring parent leverage below 2.5x through deconsolidation and repayment.

The analyst pointed out that Calumet underperformed during the ramp-up of its biofuels unit, Montana Renewables, due to margin pressure, but recent developments may shift momentum.

Reports suggest that the Environmental Protection Agency is preparing to increase demand for Renewable Identification Numbers, or RINs, beginning in 2026, following lobbying from oil and agricultural interests. Meanwhile, California is in the process of re-approving measures to boost demand for Low Carbon Fuel Standard, or LCFS credits.

Prices for RINs have approximately doubled since December 2024, and the analyst expects them to remain within a favorable range, with some upside potential as regulatory developments advance.

A recovery in demand for LCFS credits is also anticipated, which would support higher margins.

For the investment thesis to materialize, the analyst notes that the company must demonstrate margin recovery in financial performance, achieve meaningful volume growth at MRL, and make tangible progress toward monetizing MRL and reducing overall leverage.

Price Action: CLMT shares are trading higher by 5.84% to $13.89 at the last check on Tuesday.

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