The firm tagged the company with a $4.44 price target — suggesting a 73% upside over Thursday’s closing price — based on demands for the company’s Ultra Shear Technology (UST).
Shares ended Thursday at $2.56.
In January, the company received an order for six of its CBD oil-processing UST machines, which analyst Elizabeth Senko valued in the $1.1-1.2 million range.
“This order is notable for two reasons,” Senko wrote. “The contract covers half of PBIO’s planned UST sales for 2020, and the order comes from a single client. In addition, in our view, the order demonstrates how the lack of sales/marketing bandwidth may be holding back PBIO s overall sales growth. In late 2019, PBIO brought on someone to focus on UST sales, and clearly it appears to be paying off.”
In addition, the Massachusetts-based company unveiled a benchtop version of its UST machine. That’s a good sign, as Zacks estimates the CBD market will continue to grow.
“The CBD industry is in an explosive growth and land-grab mode with many companies spending to improve bioavailability, increase the quality of products, and scale production,” Zacks wrote. “We believe the market for these machines is quite large and have modeled for solid growth over the next few years. Our revenue model assumes $2.5 million in UST sales for 2020 (12 units) growing to $7 million by 2022 (35 units).”
Zacks did note that the CBD window could close within a few years as the industry begins to consolidate, however, the firm sees opportunity outside CBD, “particularly in food, pharmaceuticals/nutraceuticals and cosmetics.”
Contact Andrew Kessel at [email protected]
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