Baird analyst Ben Kallo said the weakness in Darling Ingredients following its announcement it may invest future DGD cash flow for further production expansion as opposed to increasing its dividend is a buying opportunity. The analyst views the production expansion positively and management believes it can generate sufficient free cash flow to self-finance the expansion. Kallo reiterated his Outperform rating and raised his price target to $22 from $20 on Darling Ingredients shares.

Reports Q1 revenue $1.4B, consensus $1.48B. "For several years, we have enjoyed tailwinds from a demand-driven global economy and strong global commodity and specialty ingredient prices. We are now adapting to the new reality of abundant global supplies. This is a cycle we have seen many times, and we are making the necessary adjustments in our procurement process and lowering our operating costs where feasible to gain back our margin leverage," said Randall C. Stuewe, Darling Ingredients chairman and CEO. "Globally we are seeing very nice progress and improvement in April for our core specialty ingredient business, and DGD has finally worked through its higher-priced feedstock pipeline. We anticipate an improved performance for the rest of the year."