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Origin Materials' PET Caps Technology Boosts Valuation Potential, BofA Says
2024-08-17 00:10
12:10 PM EDT, 08/16/2024 (MT Newswires) -- Origin Materials (ORGN) is seeing accelerated demand for its Polyethylene terephthalate, or PET, caps technology, leading to potential upside to its valuation, BofA Securities said in a Friday note.
"Based on how disruptive this new technology could be for PET bottles, our revenue estimates have significant upside," BofA analyst Steve Byrne said.
About a year ago, Origin reported its discovery of a process to produce PET-based caps and closures, enabling plastic bottles to be 100% PET, and thus fully recyclable, the note said.
Origin said in its Q2 earnings call that it has secured a $100 million, two-year contract for PET-based caps and closures, starting in early 2025. It now has contracts with production tollers in the US and Europe.
"While we continue to see long-term value in Origin's biomass conversion technology, this ramp in PET closures has pulled forward our estimate of EBITDA breakeven to 2027 vs 2029 previously, with potential for profitability in 2026 due to additional discussions underway for closures contracts and/or licenses," the analyst said.
BofA upgraded the stock to buy from neutral and raised its price objective to $3 from $1.35.
Price: 1.33, Change: +0.23, Percent Change: +20.45
