Gevo Inc ( NASDAQ: GEVO ) gains on patent ruling and upgrade

Gevo Inc ( NASDAQ: GEVO ) gains on patent ruling in its favor. Stock jumped as much as 46% and retreated from day's high. Stock is traded at $7.49, 25 % up from yesterday's closing. Canaccord Genuity maintains a 'Buy' on Gevo, Inc. price target of $16.00.

Patent ruling
Gevo Inc. probably didn’t infringe a patent held by Butamax Advanced Biofuels LLC, a joint venture of DuPont Co. (DD) and BP Plc (BP/), and is free to sell its renewable-fuel products, a judge said in a pretrial ruling.

Butamax sued Gevo, backed by the oil refiner Total SA (FP) and specialty-chemicals maker Lanxess AG (LXS), in 2011 alleging misuse of technology for genetically engineered microorganisms used to produce biofuels. U.S. District Judge Sue Robinson, in an opinion filed yesterday, denied Butamax’s request for a preliminary injunction to block Gevo’s fuel sales.

“The court finds it unlikely that plaintiff will prevail on its claim of infringement” at trial, Robinson wrote in a 25- page opinion in federal court in Wilmington, Delaware. She also said that Gevo “raised a substantial question concerning validity” of two patent claims based on earlier inventions.

Gevo, based in Englewood, Colorado, is involved in several patent lawsuits with Wilmington-based Butamax. Gevo built a biofuels plant in Luverne, Minnesota, to produce renewable additives to be sold to oil refiners that make diesel and jet fuel. The Minnesota plant can also produce ethanol, according to court papers.

Sell Fuels

Based on the ruling, Gevo may sell fuels “in any market, to any customer, in any region,” the company said in a statement today.

Butamax said it plans to appeal.

“This is an early step in a long and complex litigation process,” Butamax Chief Executive Officer Paul Beckwith said in a statement. “We remain highly confident in the ultimate outcome of this case and our other cases against Gevo.”

The case is Butamax Advanced Biofuels LLC v. Gevo Inc. (GEVO), 11cv54, U.S. District Court, District of Delaware (Wilmington).

Buy Rating

Canaccord Genuity maintains a 'Buy' on Gevo, Inc. price target of $16.00.

Analyst, John Quealy, said, "We expect Gevo’s pioneering technology to successfully ramp into commercial production of cost-effective gateway chemicals, such as isobutanol, over the next 12 months. Volatility will remain elevated."

"Looking forward, remaining litigation likely continues for some time, in our
view (remaining a drag given legal expense). That said, risk is now significantly lowered, as upcoming milestones remain firmly intact. A capital raise also looks more likely in the near term ($150M shelf outstanding) with this hurdle now cleared."
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