Citi analysts upgraded Darling Ingredients (NYSE:DAR) to Buy from Neutral, while adjusting their price target on the stock to $48 from $50.

The analysts noted that Darling Ingredients' shares have declined 25% year-to-date, making them the worst performer in their coverage. Despite near-term concerns, including an updated 2024 EBITDA estimate below the company's guidance range of $1.3-1.4 billion, the analysts believe this downside is already reflected in the current share price.

They anticipate significantly improved earnings in 2025, driven by higher-margin sustainable aviation fuel sales at Diamond Green Diesel, increased Low Carbon Fuel Standards credit prices in California, and favorable changes to U.S. biofuels tax credits. Although these factors may not impact earnings until 2025, the analysts expect increased visibility around them in the coming months, which could drive the share price higher.