Calyxt Inc (NASDAQ:CLXT) shares jumped Tuesday after an analyst at Canaccord Genuity Capital markets doubled the firm’s price target for the company from $8 to $16 and reiterated a "Buy" rating in a note to clients published late Monday.
The firm’s increasingly bullish stance follows Calyxt’s decision in December to sell all 2020 grain production of its high oleic soybean to agriculture giant Archer-Daniels-Midland Company (NYSE:ADM).
“Our Buy recommendation is based on the company’s shift to a less capital-intensive, higher-margin model focused on seed sales and licensing revenue across an expanding seed and trait opportunity,” analyst Bobby Burleson wrote. “As mentioned in prior research, CLXT is well on its way to transitioning away from capital intensive grain sales, following an announced contract to sell its 2020 grain production ... .”
Shares of Calyxt improved more than 10% to $11.83 Tuesday afternoon.
Canaccord noted that Calyxt should see “long-term profitable growth” from more than six potential seed and trait sales and/or licensing opportunities. The firm projects most revenue will come from seed sales, but licensing its genetic traits and technology would improve the company’s upside.
Included in the report are new financial estimates for 2020, which shows declining revenue as the company transitions to seed sales but a narrowing loss. Canaccord expects revenue of $8.6 million, down from its 2021 projected revenue of $25.9 million, and an adjusted EBITDA loss of $20.8 million, less than its 2021 projected EBITDA loss of $26.1 million.
“CLXT is pursuing [an] aggregate revenue opportunity of $2.3 billion within an $8.1 billion TAM across six crops (winter oats, high fiber wheat, high oleic low linolenic soybean, high saturated fat soybean, hemp, and improved alfalfa),” Burleson wrote. “Taken together, long-term top-line growth could be in the mid-double-digits. Operating leverage would be substantial, given the seed sale and licensing model carries higher gross margins (40%-60% seed sales GM; much higher for licensing) and requires minimal growth in operating expenses.”
Calyx, based in Roseville, Minnesota, is a technology company on a mission to deliver plant-based innovations. Founded in 2010, Calyxt uses its proprietary TALEN gene-editing technology to change the way the world uses plants to solve problems.
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