Origin Materials, a company listed on the NASDAQ under the ticker symbol ORGN, has received a significant boost in its stock value following an analyst upgrade. The upgrade comes as the company reported its second-quarter financial results recently.
Despite missing the consensus loss per share and sales expectations, Origin Materials announced securing a 2-year Memorandum of Understanding (MOU) for PET closure production, which is forecasted to generate over $100 million in revenue starting in early 2025 and increasing notably in 2026.
Following these developments, BofA Securities analyst Steve Byrne upgraded Origin Materials from a Neutral rating to a Buy and raised the price target substantially. Byrne attributes the upgrade to the accelerated EBITDA breakeven estimate, now set for 2027 instead of 2029, and the potential for profitability as early as 2026 due to upcoming contracts and licenses.
The analyst also highlights the long-term potential of Origin Materials’ biomass conversion technology, specifically mentioning the ability to convert cellulosic materials into Chloromethyl furfural (CMF) and Hydrothermal carbon (HTC). While this process has a longer timeline, the production of functionally superior products like polyethylene furanoate (PEF) could offer higher margins and lower capital expenditure compared to traditional methods.
Byrne projects a significant increase in licensing income for Origin Materials in the coming years, with $10 million expected in 2027 and $20 million in 2028.
As a result of the analyst upgrade and positive outlook, Origin Materials’ stock surged by 26.4% to $1.39.
In summary, the analyst upgrade and promising financial outlook have positioned Origin Materials for early profitability, with potential milestones set for the next few years. Investors and market watchers are optimistic about the company’s growth prospects and technological advancements in the sustainable materials sector.
