Shares of Darling Ingredients (DAR) plummeted 5.04% in Friday's trading session following the release of disappointing second-quarter earnings and subsequent analyst downgrades. The company, which specializes in turning animal by-products and food waste into valuable ingredients and renewable fuels, faced significant headwinds in its renewable fuels segment.

Darling Ingredients reported Q2 earnings per share (GAAP) of $0.08, missing analyst estimates by a substantial 66.7%. This sharp decline in profitability was primarily attributed to lower profits from renewable fuels, particularly in its Diamond Green Diesel (DGD) joint venture. While revenue slightly exceeded expectations at $1.5 billion, the company's combined adjusted EBITDA fell 8.8% year-over-year to $249.5 million.

Adding to investor concerns, Darling Ingredients reduced its full-year FY2025 combined adjusted EBITDA guidance by over $200 million, citing ongoing challenges in the renewables sector. In response to these developments, several analysts downgraded the stock. Notably, Baird analyst Ben Kallo lowered the rating from Outperform to Neutral and adjusted the price target from $40 to $36. The company now faces an uphill battle to stabilize its renewable fuels business and navigate uncertain regulatory and market environments in the coming quarters.